Think Money

Think Money

April 14, 2009 10:19 ET

Savers Have More Protection Against Debt

LONDON, UNITED KINGDOM--(Marketwire - April 14, 2009) - Responding to new figures suggesting that less than half of consumers put money into savings on a regular basis last year, financial solutions company Think Money has emphasised the importance of putting money aside each month, adding that people with savings have more protection against debt and other unexpected financial circumstances.

A new survey from National Savings & Investments (NS&I) has claimed that just 47% of people in the UK made regular savings throughout 2008, meaning that over half either put money away from time-to-time or saved nothing at all.

However, NS&I also said that people who are saving have increased the amount they put away on average, with a higher level of savings in the three months to the end of February 2009 than in any quarter since records began four years ago.

Nationwide Building Society, which also tracks savings activity amongst UK consumers, gave very similar figures with regard to regular savers - 46% of respondents to their survey claimed they were regular savers.

But Nationwide reported that people who are saving may not be saving enough. According to its research, 60% of consumers believe they are saving less than they need to, while just 36% think they are saving about the right amount or more.

Nationwide's director for savings and mortgages, Andy McQueen, noted that growing savings also indicates a growing 'savings gap'. He said: "With a quarter of the population saving nothing at all, there seems to be a divide between those that have saved, continue to save and increase the amount they save and those that have not saved, do not save and have no means to save."

However, NS&I gave a slightly more optimistic picture, saying that only 6% of people were saving nothing at all.

A savings expert for Think Money commented: "Savings should be a very important aspect of anyone's finances, since they provide security in later life, as well as short-term security if any unexpected costs arise.

"In particular, people with a good amount of savings are far less likely to get into serious problems with debt. There are a number of very effective debt solutions available these days, such as debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements), but in the first instance we would advise people in debt to draw on any savings they may have to pay off as much of their debt as possible.

"The reason for this is quite simple: the interest on debt tends to grow much more quickly than the interest on savings, so the borrower will save money in the long run by repaying their debts first.

"Of course, a lot of people struggling with debt have no savings at all, and for those people it is especially important that they speak to a professional debt adviser to discuss their options. In some cases a few words of advice may be all that's required, but if the situation is a little more serious, finding the right debt solution can make a big difference to the borrower's ability to repay their debts."

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One of the UK's leading financial solutions providers, Think Money is headquartered in Salford Quays, Manchester, and employs around 600 employees to deliver a comprehensive range of loan, banking and debt management solutions. It defines its mission as 'To educate, rehabilitate and advise on all aspects of financial management'. For more information, contact Melanie.Taylor@thinkmoney.com (0845 056 6480) or visit the Think Money website at http://www.thinkmoney.com/

Think Money homepage: http://www.thinkmoney.com/

Debt advice: http://www.thinkmoney.com/debt/

Debt management: http://www.thinkmoney.com/debt/debt-management/

Debt consolidation: http://www.thinkmoney.com/debt/debt-consolidation/

IVA: http://www.thinkmoney.com/debt/IVA/

Banking: http://www.thinkmoney.com/banking/

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