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Consumers using savings to pay off loans
Consumers are aiming to pay back unsecured loans and overdrafts while interest rates are low, it has been claimed.
Figures from the Bank of England show that £379 million was wiped off people's debts in November 2009, while data from the Building Societies Association highlighted that the sum held in savings accounts declined by £0.6 billion during the same month.
Commenting on these findings, Ed Bowsher, head of consumer finance at lovemoney.com, said that people are not getting high interest rates on their savings so are using any spare cash to pay off debts.
"The rates you will get on your savings accounts are so low at the moment people think it is better to pay off debt and they will be in a better position when rates do go up. They will have less debt and will be paying less interest on that debt," he said.
Recent debt figures published by Credit Action placed levels of consumer debt at £1,459 billion at the end of November last year.