Nationwide: Debt repayments put before savings

People are paying off debt rather than saving and considering how best they can provide for their pension needs.

They are the major findings in the latest Nationwide UK (Ireland)/ESRI Savings Index.

The measure used to determine people’s saving patterns had decreased by 16 points in September, according to Brendan Synott, the managing director of Nationwide in this country.

This was driven by negative consumer sentiment towards the prevailing economic conditions and an emerging preference to use any spare cash to repay debts.

This was the first decrease in the Savings Index since June.

In September, 47% of people believed that it was a bad time to save compared to 40% in August.

There was an increase in the number of people who believed that the current economic climate made it a bad time to save.

Although 64% of respondents thought it was important for people to save regularly, 60% of consumers said that they would use any surplus money to pay off debts, including their mortgage.

This was an increase of seven percentage points from 53% in August, and was the highest recorded score since data collection started in April of this year.

Even though a majority of consumers said they were saving less than they should, 59% thought they would be saving the same amount in six months time.

Mr Synnott said events of the past month appeared to have had a profound impact on the perceptions of consumers.

Normally, a deterioration in economic conditions led to an upward trend in the Savings Index.

However, this month's negative results throughout the Index indicate that people were turning their attention beyond savings towards debt repayment and pensions.

Article courtesy of The Evening Echo newspaper.