Consumers Repaying Loans Rather Than Saving
A new report from Unbiased.co.uk has revealed that the UK has seen a major turn around in attitudes from consumers towards their debts and savings over the course of the past twelve months.
It would appear that as a nation, we have turned our attention away from savings in an attempt to reduce our levels of debt on personal loans, credit cards and other credit commitments. Consumers in the UK repaid a staggering £38.6 billion worth of personal loan debt over the course of last year, excluding mortgage and homeowner loans, however this repayment was at the cost of regular savings, with £1.76 being used to repay debt for every £1 saved, during the last three months of 2008.
Overall, 2008 saw a large change in attitudes, with people still borrowing large amounts at the beginning of the year, as well as saving on a regular basis. But with the changing economic conditions in the UK, individuals have seen the interest rate payable on their savings plummet, whilst interest rates on personal loans, credit cards and overdrafts have actually increased. It is hardly surprising therefore, that we have seen this change of focus from saving to debt repayment.
Individuals in the UK saved a total of £103 billion over the course of 2008, which although may sound impressive, represents a 30 per cent decrease on the previous year.
David Elms of Unbiased.co.uk advised consumers to consider their overall financial situation rather than just focus on one area. He said, “There is an awful lot of consumer fear and confusion out there right now and it is vital people seek professional advice from an IFA (Independent Financial Adviser) to enable them to strike the right balance between borrowing, saving and other aspects of their finances throughout these difficult times.”
