Pay off debts before saving, claims expert

It is better to pay off debts than contribute to savings accounts, people considering payday loans have been informed.

Justin Modray of candidmoney.com said that those fortunate enough to have savings should use them to pay off debts but conceded that many people will be using every penny to keep the wolves from the door, with saving up just a "pipedream".

"If food and fuel prices remain high this year then many household finances will really struggle as much of their income is spent in this area. Fortunately interest rates look set to stay low for some time which gives some respite through low mortgage payments," he explained.

His comments follow debt statistics from Credit Action which found that the average household debt is £55,803, while the typical amount owed by every UK adult, including mortgages, is £29,536.

Mr Modray added that many households, including those seeking payday loans, will feel the brunt of tax rises and spending cuts when they take hold later this year.

Moneyextra.com recommends you take independent financial advice before acting on any article

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2011-08-01 15:06:23 © Moneyextra.com