Consumers Rush to Repay Debts at Expense of Savings
British adults are reportedly paying off their debts at record rates due to the volatile economic environment, but at the expense of their savings.
Consumers repaid on average 14p of debt in every pound they saved in the last quarter of 2010, down from 16p in quarter three, but still making 2010 a record year of debt repayment, the Savings Brake research by Unbiased revealed.
A record of 19p was repaid in every pound saved during the first two quarters in 2010. However, saving levels dropped to £15 billion in quarter four of 2010, compared to £20 billion in the first quarter as a result.
“Debt repayment levels have tailed off towards the end of last year, therefore it will be interesting to see how this will develop during 2011,” said Karen Barrett, Unbiased’s chief executive.
“As the cost of living increases and with higher taxes on the horizon, combined with continuing low interest, we will see an effect on consumer savings habits and our figures already show overall savings levels have steadily fallen over the past few years.”
The study revealed a trend which shows consumers are more conscious of their debt levels and have been working hard to repay what they owe. A total of £12,081 million was repaid in 2010 as uncertainty in the market explains why people want to be rid of their debts.
It is also an indication that consumers are having difficulties gaining access to loans as borrowing becomes more restricted.
Bad Credit Credit Cards
According to Moneysupermarket, five million Brits are permanently overdrawn as the economic recovery is making it harder for many to afford basic living expenses.
If you have been refused a credit card due to a bad credit rating, investigate a prepaid debit card as a suitable alternative.
By loading your monthly budget onto a prepaid debit card you can use it as you would a credit card, but with the knowledge that you will not overspend and end up in debt.