Paying off debts 'a good idea for reluctant savers'

Savers should take the opportunity to pay off debts on mortgages and credit cards if they are unwilling to put money away at present, it has been suggested.

According to Martin Bamford, chartered financial planner for Informed Choice, the low interest rate environment, aligned with high levels of inflation, may be discouraging some consumers from saving.

But even where this is the case, individuals should still be attempting to improve their own financial predicament, he said.

Paying off debts while the best interest rates are not available on savings "usually makes good financial sense", Mr Bamford stated.

The figure for Consumer Price Index annual inflation was up to 3.5 per cent in January, from 2.9 per cent in December.

According to Mr Bamford, this high level "is a bit of a cruel trick for the UK economy to play on savers, after interest rates have been at such a low level".

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2010-02-22 14:32:44 © Moneyextra.com