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Spain among Europe's biggest festive spenders, but a growing number resort to credit to fund Christmas
thinkSPAIN , Sunday, January 8, 2017

SPAIN has spent more on the festive season than almost any other country in Europe – partly because, with the Twelfth Night and Epiphany celebrations, Spaniards effectively have two Christmases.

More and more families are choosing to give gifts on Christmas Eve night as well as the evening of January 5, although some prefer to stick to Spanish tradition and keep present-giving to the latter, brought by the Three Wise Men instead of Santa Claus.

The Magi are known as the Three Kings in Spain, and the parades with Melchior, Balthazar and Casper followed by the mass ripping of wrapping paper is the most exciting moment of the holidays for most children.

But all this takes its toll on Spanish families' bank accounts – the average household spent €682 on gifts alone, the highest figure seen since 2009.

This may be due to rising prices, or to residents generally feeling more financially secure than they ever have during the financial crisis which started eight years ago.

Only Danish families blew more on festive presents, but not by a wide margin, with a typical household shelling out €689.

This means Spain spends 29% more than the Germans, 11% more than the Italians, 15% more than the Belgians and a whopping 60% more than the Portuguese – and 4% more than they did for the Christmas and New Year festivities over 2015-2016.

By contrast, spending dropped elsewhere in Europe by 1%, but Spanish consumers interviewed by accountants Deloitte said, in 74% of cases, that they felt more confident in the stability of the national economy than they had a year previously, when 63% believed the country was becoming more financially secure.

With the minimum wage being just €655 a month, it is difficult to comprehend where most households would find €682 for presents alone – but a study by Kelisto shows that 3.6 million consumers, or 12.2% of the adult population, resorted to credit cards, staged payments, personal loans and even payday loans to fund Christmas and the Three Kings.

This has not proven to be a wise move, with interest rates on personal finance typically around 12.25%, plus set-up commissions and annual fees just for owning a credit card.

In fact, taking into account the APR, credit card use can attract interest rates of as much as 24%.

Another study, by the 'money supermarket'-style website Rastreator, revealed 13% of households in Spain were worried about whether they would cope with their credit card costs – in general terms, the price of Christmas is one of the most headache-inducing financial commitments of the year for most residents, above and beyond the cost of holidays and even that of sending children back to school in September, which in Spain includes buying all the textbooks and exercise books they will need for the year and paying school bus fees.

More and more Spanish families are starting to buy Christmas presents year-round to soften the blow, according to Rastreator.

Retailers themselves are starting to offer more finance deals to help boost trade over what is generally one of the most lucrative periods of the year, along with the January-February and summer sales.

Nationwide department store El Corte Inglés has lent €1 billion through its store cards and other features, including a scheme whereby these cardholders can ask for an advance up to January 5 and pay it back in full by February 28, or split it over three months interest-free.

The store also offers repayments in six monthly quotas, the first three without interest and the remaining three with an APR of 7.78%.

Purchases of electronics, white and brown goods, IT, photographic and telecommunications equipment can be repaid over a year.

Minimum spends are not necessary for Corte Inglés store cards, and the holder can set a monthly figure they can afford to pay back, year-round.

El Corte Inglés is the parent company of the supermarket chains Hípercor and Supercor, and store card deals are also valid in these.

Hypermarket chain Eroski also offers free finance over 10 months from February this year to anyone who holds the Eroski Red ('Eroski Network') card, which serves to gather points that translate as cash to spend in store.

Carrefour customers who hold the PASS card can finance their purchases by repaying over three to 10 months, for goods valued at between €90 and €2,000.

The credit is interest-free for the first three months, and carries an APR of 11.18% over the next seven.

According to Kelisto, resorting to credit for Christmas was most seen in the Spanish-owned city-provinces of Melilla and Ceuta on the northern Moroccan coast, accounting for 15.2% and 14.5% of residents respectively, followed by the south-eastern mainland region of Murcia at 13.2%, the Balearic Islands at 12.96% and Andalucía at 12.94%.

Those regions where consumers were least likely to turn to credit were Asturias, at just 10.31%; the Basque Country, at 10.6%, and Cantabria at 11.1%.

Figures from worldwide recruitment centre Adecco show that 950,000 people in Spain were able to get temporary jobs in retail and catering over the Christmas and New Year period, with some positions lasting until the end of February when the sales end, meaning this is one time of year when those most strapped for cash are more likely to be able to afford to give gifts to friends and family members.



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