Over 100,000 of the UK’s poorest families will spend 2010 saddled with a combined debt of around £82 million after borrowing money from loan sharks to pay for Christmas 2009, according to a new report commissioned by Circle Anglia, a provider of affordable housing.

The Real Cost of Christmas report, written by think tank the Financial Inclusion Centre, found that an estimated £29 million in illegal doorstep loans were taken out over the holiday season, making it the worst Christmas in a generation for this type of borrowing.

Circle Anglia commissioned the research to highlight the issue after noticing an increase in the number of its residents being targeted by loan sharks, and has launched a campaign to raise awareness among residents, who find themselves in financial difficulty.

Evidence shows that on average people borrowed nearly £300 from loan sharks to cover the cost of Christmas, but with exorbitant interest rates averaging 825% (some rates can reach as high as 1,500%), they will pay back over £800. The average loan repayment period is a year, meaning that a large number of Britain’s poorest households will still be paying off their debt in Christmas 2010.

The report also found that illegal loan shark activity is on the up in the UK. Over the last three years the estimated use of loan sharks increased from 165,000 to over 200,000 households per annum – a 22% rise.

As the recession continues to bite, loan sharks have moved in with loans from illegal doorstep lenders at Christmas time accounting for up to half of all loans borrowed from loan sharks in 2009.

Andy Doylend, executive director of operations at Circle Anglia, said: “These figures are very concerning and demonstrate the scale of illegal lending across the UK. We hope that by turning the spotlight on loan shark activity we can help more people to seek help and get sound financial advice. A simple step such as borrowing from a credit union or a community finance organisation instead of a loan shark could have saved the typical low income household £500 in debt repayments – more than enough to fund the whole of Christmas 2010 as well.