Raiding savings 'makes more sense than taking out loans'

Consumers are better off raiding their savings than taking out high interest loans in the current environment, according to one financial advice website.

A spokesperson for Candidmoney,com said many UK households are still struggling to make ends meet, with the economic downturn continuing for them as individuals.

He explained that, currently, a third of accounts are savings interest rates of around 0.1 per cent annual interest – while the average credit card and overdraft charge is over 16 per cent.

So while consumers are attempting to preserve their cash reserves by taking out a loan, they are ultimately spending more money than they need to.

The spokesperson also highlighted inflation as being a problem for savers in the current market.

"With inflation currently outpacing even 'best buy' savings accounts, there's little savers can do other than grin and bear it," he said.

According to research conducted by Schroders, around 31 per cent of British consumers have drawn on their savings in the last 12 months.

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2010-08-25 11:58:41 © Moneyextra.com