Brits in financial difficulty are using their savings to pay off credit card debt, new research has found.
Nearly five million people are said to have escaped credit card debt over the last 12 months by chipping away at savings accounts.
A survey found that the average savings balance fell by £100 to £1,684 over the last 12 months.
10 % of people said they’d managed to clear all their debts by using up their savings .
The average debt on credit cards, unsecured loads and hire purchase arrangement fees has fallen to an 18 month low now at just £2,513.
The rising cost of living is having a detrimental effect on families who are already scraping the bottom of the financial barrel to make ends meet. Yet despite this , figures show that clearing off debt is high on the agenda for cash strapped Brits.
Richard Doe, chief executive of ING Direct commented, “Since we began tracking the financial behaviour of ordinary Britons in 2009, consumers have been juggling with spending, paying off debt and putting money away for a rainy day.
While many have reduced their debts, often at the expense of spending and saving, others continue to rely on their credit cards.
However, the report demonstrates that there is a determination among the public to further reduce debts and rebuild savings, with the latter a growing priority. But in the current environment it may prove difficult for consumers to realise both of these aims.”
There are many credit cards currently on the market which offer incentive deals. There are now nearly twice as many credit cards offering 0% introductory purchase and balance transfer deals than five years ago.
Independent financial research company Defaqto has revealed that the average credit card APR has increased from 15.8% to 18.4% in the last five years, but the introductory offers are more consumer friendly.
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