Clear debt before saving, expert advises

It is advisable for people to ClearDebt before they attempt to build up savings in the current economic climate, it has been claimed.

Sharon Bratley, a chartered financial planner for Fairinvestment.co.uk, noted that borrowers will be paying higher rates than they would receive on any savings, therefore it is better to pay off outstanding amounts first.

She said that it is a “rule of thumb” that consumers should reduce debts before stashing money away, adding: “This is especially true at the moment when savings rates are at historically low levels.”

And she recommended that people dip into savings rather than borrow more money at present, explaining that this is an essential tip for when “times are hard”.

It comes after the Post Office’s latest consumer credit report revealed that 2.6 million people plan to spend more on credit cards for everyday living costs in 2009 than they did last year.

By Jamie Price