Households paying off debt rather than saving

2 July 2009

New savings and mortgage figures from the Building Societies Association (BSA) have suggested that households are looking to repay debts rather than save.

The BSA claimed that savings balances held by building societies had fallen by £106 million in May 2009, compared with an increase of £1,162 million in the same month last year.

Adrian Coles, director-general of the BSA, said: "There is evidence that households are looking to repay debt rather than save, and it is possible that there will be a net withdrawal (before interest credited) from the total UK savings market in 2009."

A debt expert for Think Money commented: "Savings are important in terms of financial security, but many people may currently prefer to use the money to pay off debts, as this can lessen the risk of financial difficulties in the future.

"Of course, there are also some people who simply can`t afford to save because of their debts. Anyone who finds themselves struggling should contact an expert debt adviser at the first sign of difficulty."

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Tags: savings, cant afford to save, debt

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