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Paying off debts 'more important than saving'

By Sarah Engle, Thu 25 Mar 2010 - Published in Loans

People should be looking to pay off their debts rather than save money, an expert has suggested.

Recent research from Santander found that Brits have put away £59.4 billion in the last 12 months, with the average person saving £219 a month.

Commenting on the study, MoneyExpert.com head of research Pierre Williams said that conditions for savers are "pretty dire", as the Bank of England's base rate of 0.5 per cent has caused the amount of interest they earn to plummet.

However, he pointed out that while banks have closely linked the rates on saving accounts to the bank, this is not the case with the money they have lent - making it more important to pay off debts.

"People with mortgages have been the big winners and if you can afford to overpay on your mortgage you can make big long-term savings," the expert added.

The Santander report showed that over 28 million people in the UK have put aside cash savings, with the average balance standing at £39,000.