Debt Eat Savings
A recent survey by Unbiased.co.uk revealed that for every pound saved in the third quarter of 2006, 49p was run up in debt. This means that consumers who have high debts and savings accounts are actually loosing money.
David Elms, Chief Executive of Unbiased.co.uk, who commissioned the report, said: “Consumers are beginning to sit up and take notice of the increasing calls to save – however, they are compromising these positive steps by continuing to borrow money to accommodate spending habits.
Until people take responsibility for their debt then the benefits of saving will be diminished.”
The financial adviser’s “Savings Brake” report outlines of the ratio of money UK adults borrow - not including mortgage debt - contrasted with how much they save. This means that the actual figure of 49p is much higher than the report indicates.
The statistics revealed that the UK saved nearly £32 billion between July and September 2006. However, while some people are taking steps to avoid debt, their misunderstanding about the impact debt has on their savings is eating their savings up, over the long term, faster than they can save.
“Consumers are beginning to sit up and take notice of the increasing calls to save, however they are compromising these positive steps by continuing to borrow money to accommodate spending habits,” said David Elms, the chief executive of Unbiased.co.uk.
“Until people take responsibility for their debt then the benefits of saving will be diminished.”
He concludes that the figures are “disappointing” and said:
“that although people are recognizing the need to save more they may not be budgeting to avoid taking on new debt”.