Savers are regularly putting funds into a savings account but are failing to service their debt, reveals a new report.
An estimated 12.2 million people are putting themselves at risk of financial difficulties in the future by not redirecting savings funds to clear their credit card bills and personal loans, according to a survey by AXA Avenue.
The report reveals a contradictory social trend whereby consumers are funding their lifestyles on credit, but also feel they should put some money aside for emergency purposes.
It revealed that 25 per cent of adults are putting a total of £2 billion into their savings accounts, yet few are tackling the £57 billion they owe in unsecured debt in the form of personal loans and credit cards.
The average saver/debtor is attempting to service around £7,622 of debt while putting roughly £221.14 into a savings account every month.
The situation is even more paradoxical in the 25- to 34-year-old age group where the average person owes over £9,000, but is also managing to put £300 each month into a savings account.
This trend is seeing many consumers lose out financially, with the interest earned on their savings account being completely cancelled out by the interest being accrued on their debts.
For instance, on average if a saver earns £1 of interest on a short term savings account, the person is probably paying out an additional £5 on interest mounting up on their debts.
Savings accounts not being used to clear debt, says report
Savings accounts not being used to clear debt, says report
Thu, 11 May 2006
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