The vast majority of workers get paid on the same day, eleven months of the year. December is different. Festive cheer is in the air, everyone is merry and, most importantly, payroll teams want a holiday as well. So, many employers bring the last payday of the year forward, processing it before the holidays and giving staff a bit of a pre-Christmas treat.

While undeniably handy at such an expensive time, it also means that the gap between paydays is stretched significantly, reaching nearly six weeks for some in January. Unfortunately, this makes budgeting harder and debt much more likely.

Research by ClearScore showed that more than half of UK households struggle to stretch their December pay until the end of January. More concerning still, in the pandemic, one report found that a majority of employees paid early in December have to use some form of credit in the New Year. With inflation driving up the price of Christmas this year, these figures can sadly be expected to worsen.

Zooming in on the most problematic debt of all – such as payday loans and overdrafts – the situation is no brighter. Workers paid monthly are twice as likely to use these short-term, high-interest products in the New Year compared to those paid weekly. In fact, January is something of a boon for this predatory industry:

• The use of payday loans goes up 5X

• Workers are 7X more likely to use their overdrafts

• Bank loans are 12X more commonly taken out

What these figures highlight is that the timing of pay really matters; the same amount of money is more or less valuable based on when we receive it. This is a concept readily understood in the context of business cashflow, but often overlooked at an individual employee level.

With on-demand pay, employees can access a portion of their earned wages when they need. This gives them the flexibility to manage an expensive December and provides a powerful alternative to credit in the New Year. Employees don’t want freebies, but access to their own hard-earned income is a resolution we’re sure they’d love!