Savings Fall As Consumers Rush To Pay Off Debts

Published: 27 August 2010 By MoneyHighStreet Staff Leave a Comment

Consumers are focussing on repaying debts as fears of a double dip recession remain, however this is badly affecting the amount of savings being put aside.

Savings AccountBritish consumers are repaying 7p for every pound they saved, according to findings from unbiased.co.uk, a professional advice website. So whilst this makes sense in post credit crunch Britain, it is hitting savings hard.

Saving levels fell by over £7 billion during the second quarter of the year when compared to Q1 2010.

It appears to be lingering fears that the UK will experience a double dip recession and lack of job security that is encouraging many consumers to pay off their debts before adding to their savings accounts, as Karen Barrett, Chief Executive of unbiased.co.uk, comments:

“Brits appear to have shifted their financial habits to reflect those last seen at the height of the credit crunch, with debt repayment top of the priority list. For the first time since 2008, consumers are now paying off more debt than they’re borrowing – however this has inevitably also resulted in a drop in savings levels.

“For those who are in a position to save, no matter how little, it is important to ensure you are doing whatever you can to make your savings work hard – especially as interest rates remain static. In order to ensure you are making the right choices with your finances, it is vital to seek professional advice from an IFA. An IFA can advise you on striking the best balance between borrowing and saving, as well looking at your overall financial position and recommending products from the whole of the market to guide you through.”

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