Tuesday, August 31, 2010
Category:
Consolidation
According to research conducted by unbiased.co.uk, Brits are reverting to repaying their debts; a behaviour that hasn’t been witnessed since the start of the financial downturn. The professional advice website has pointed out that this comes as economic reports warn of a double dip recession. Brits have reportedly ‘let savings nose-dive’ and have returned to repaying more debt than they are borrowing, which was last the case in the fourth quarter of 2008.
Unbiased.co.uk’s research into the ratio of how much we are borrowing in relation to how much we are saving revealed that Brits repaid £1 billion more than they were borrowing during the second quarter of this year. This is equivalent to consumers repaying seven pence of debt for every pound saved. In contrast, Brits borrowed 66 pence for every pound saved in the fourth quarter of last year, which amounted to £16 billion of debt.
The research also uncovered that Britain’s levels of savings fell by almost £8 billion during the second quarter of this year, from £23 billion in the first quarter.
Chief Executive of unbiased.co.uk, Karen Barrett, commented: "Brits appear to have shifted their financial habits to reflect those last seen at the height of the credit crunch, with debt repayment top of the priority list. For the first time since 2008, consumers are now paying off more debt than they're borrowing – however this has inevitably also resulted in a drop in savings levels.
"For those who are in a position to save, no matter how little, it is important to ensure you are doing whatever you can to make your savings work hard – especially as interest rates remain static. In order to ensure you are making the right choices with your finances, it is vital to seek professional advice from an IFA. An IFA can advise you on striking the best balance between borrowing and saving, as well looking at your overall financial position and recommending products from the whole of the market to guide you through.
"You can carry out a free and confidential search to find an independent financial adviser near you by visiting unbiased.co.uk."
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Homeowners who are faced with multiple credit card bills each month could consider tying them all up into one place with a secured loan. One of many finance options available, a secured loan for
consolidation could leave borrowers with just one monthly repayment as opposed to juggling several. What’s more, this single monthly repayment could even be lower than the sum of current outgoings – thereby leaving borrowers with more money each month, which could potentially be set aside to save. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
