Consumers use spare cash to pay off debt

Consumers are using their spare cash to pay off debts rather than stashing it away in a savings account, Moneyfacts has observed.

Michelle Slade, spokesperson for the consumer advice site, said many people are using money they’re saving due to low interest rates on mortgages to pay off personal loans and credit cards.

Slade believes low-interest rates on savings accounts are also encouraging people to pay off debt rather than save.

“Hopefully, people have learnt the lessons from how things have been of late; hopefully we have all learnt not to get so much into debt,” she said.

“With the risk of unemployment maybe they have shut up shop and gone for the fact that if they haven’t got it, they don’t spend it.”

Slade’s comments followed reports from the UK payments Association that credit card spending has fallen to its lowest rate for two years.

Discuss this in the Finance Markets forums

Story link: Consumers use spare cash to pay off debt