Just over half of Brits (57 per cent) will have enough money saved to cover the cost of Christmas this year - six per cent less than those who had money saved in 2010 (63 per cent).
The research found that 40 per cent of people are currently in debt, excluding mortgage and student loans, meaning they will be entering the Christmas period with their finances stretched to begin with.
Of those already in debt, more than a third (36 per cent) expect Christmas to push them even further into the red, while a fifth (20 per cent) plan to use their December salary to pay for Christmas.
For those not already in debt, the figures reveal that a shocking one in ten will be pushed into arrears by funding the festive period this year.
Overall, for those going into debt and those going further into debt, 69 per cent said they will resort to spending on a credit card, 23 per cent plan to use their overdraft and nine per cent will take out a loan to tide them over.
Tim Moss, Head of Loans and Debt at MoneySupermarket.com, said:
"This year has been incredibly tough for consumers with the rising cost of living really hitting the nations wallets hard. It comes as no shock that such a high number of people will be tipped into debt this festive season, particularly as Christmas is a time when people generally increase their spending.
"With many people also being paid early in December, January payday may seem a long way off, so planning ahead is vital to avoid carrying over the debt burden into next year.
"For the large number of people who are unable to save, there are a number of ways they can reduce the Christmas spending hangover by the New Year, and it is essential to use the right product to meet their needs.
"For example, a credit card offering zero per cent interest on purchases might be the sensible option if they are able to pay off the balance in full within the zero per cent period.
"Dipping into the unauthorised overdraft may prove costly for those unable to pay this off, particularly as the charges for dipping in the red may not hit until January."
The research revealed that Scotland was the region which saw the greatest increase of consumers in debt compared to last year, with an increase of nine per cent finding themselves owing money (47 per cent) compared with 2010 (38 per cent) and this year, the region is seven per cent above the UK average.
Tim Moss continued:
"Almost 20 million consumers will be heading into the most financially stressful time of the year already in debt, and further people will be pushed into the red as a result of the festivities.
"It is vital that steps are taken immediately to manage debt, especially in the current economic climate.
"Brits should ensure they are on the best possible rates across their savings, current accounts, credit cards and loans, so that 2012 can be started with a financial bang, for all the right reasons.
"Reducing your outgoings is vital and even opting for a frugal Christmas, may be a better option for many."
