Consumers Cut Spending To Reduce Debts
We reported recently on how a large percentage of the population in the UK have reduced their level of savings in order to try and repay as much of their personal loan and credit card debt as they possible can, whilst interest rates on their homeowner loan remains at a low level.
It would appear that as well as reducing their savings, many people are also cutting back on the amount they spend each month, instead redirecting the money towards debt repayment in an attempt to clear personal loan and credit card balances which in many cases were built up over the Christmas period.
A new report, which has been released by the insurance giant Legal & General, has revealed that somewhere in the region of 20 per cent of the population have drastically cut their spending on the high street, as well as reducing luxuries such as eating out and ordering take away meals, whilst they focus their attention on clearing their credit card balances, many of which have reached extremely high levels as a result of overspending during the Christmas period.
Whilst this approach to personal finances is a commendable one, particularly when the short term future of the economy in the UK is still uncertain, this lack of consumer spending on the high street is of course having an impact on the retail sector, making it harder for shops and small businesses to weather the current economic storm, which in turn could lead to even more casualties of the current recession and slow down the overall process of economic recovery.
It is, of course, human nature to pull the reins in to some degree when times get tough, but whilst individuals continue to dwell on their personal loan and credit card debts, we could remain in this situation for longer than necessary.
