Savings survey highlights debt priority

30/10/2009

Many consumers could be seeking debt help and are rebalancing their finances in the recession.

The new Savings and Protection survey from the Association of British Insurers (ABI) shows that one in three Britons were concentrating on repaying their non-mortgaged unsecured debts during July-September 2009.

This total stood at just 28 per cent in April-June.

Customers also displayed concerns about Payment Protection Insurance (PPI), a kind of loans cover that has been criticised by consumer groups for being overpriced and mis-sold by providers.

One in four former policyholders said that they had given up the PPI because it was "too expensive".

Dr Rebecca Driver, ABI's director of research and chief economist, said: "For the long-term health of the economy, it is encouraging more people are reducing their debts."

EuroDebt director Kevin Still commented: "The ABI report suggest several important trends, the first being that lack of return on savings and high interest rates on unsecured borrowing means that it is more sensible to reduce personal debt burdens. The second is that reports relating to companies like Swinton regarding mis-selling of PPI are affecting consumer confidence in products designed to give consumer protection if the fall ill or lose their job, which could be very important in the current climate.

He added: "The third is that short term planning through the recession has taken precedence over long-term financial planning with regard to pension contributions, in many instances because there is insufficient disposable income to do anything more than keep you head above water. EuroDebt sees many people struggling with debt that have had to make a number of sacrifices because of changes in circumstances and the impact of the recession. For many their home is not currently an asset, but may become one again in the coming years and may provide a means of becoming debt free or at least clearing unsecured debts."

Meanwhile, 41 per cent of people in work at the moment told the ABI that they were either saving little or nothing into their pensions.

Despite the falls in house prices caused by the credit crunch, a majority (54 per cent) of respondents said that they believed property to be the best kind of investment.

Tags; Debt Management and Banking, Recent Graduate Debt, Retirement Money Problems, Credit Card Lifestyle,

Regional Debt Advice; Debt Advice Lancing,

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