A new survey from Standard Life shows that people are currently spending much more on their credit cards each month than they are managing to put away into savings and Isa accounts.
UK adults with credit cards spend £3,804 on credit card payments each year, or £317 every month, according to the Standard Life report Your Commitments, Your Future. In contrast, people making monthly savings put £1,680 each year into savings acccounts and Cash Isas, or only £140 every month.
If these commitments remained unchanged over a 40-year period, consumers with credit cards would spend over £152,160 on repayments alone. This is £84,960 more than those who make monthly contributions into their savings accounts and Isas.
Tough times for consumers
Standard Life’s John Lawson said of the results: ‘Our research suggests that people are not thinking about their savings and Isas as much as they could be. If they are spending over £152,000 on their credit cards on average, there’s a strong chance that some of this money could be better managed and invested for the future.
‘People always find it hard to set priorities, particularly when times are tough. Some consumers may be using their credit cards really effectively, paying them off each month and not splashing out when they really can’t afford to. But if people are running up credit card debt, paying this off obviously has to become a priority, before savings and Isas.’
Saving not always possible
Paul Davies, savings expert at Which?, added: ‘The findings contradict the current sentiment that people are thought to be paying down debt and trying to boost their savings. It may be that consumers are using their credit card to pay regular bills as they struggle with their finances.
‘Retail figures would seem to suggest that shoppers aren’t going mad with their plastic cards at the moment. If consumers do have any spare cash at the end of the month they should address any debt first, use their Isa allowance and then put money into savings accounts.’
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