SSIAs should be used to pay off debts, says Financial Regulator

SAVERS should use payments from their SSIAs to pay off expensive debts and borrowings, the Financial Regulator said yesterday.

The special savings scheme has an estimated worth of €15 billion and accounts of the first 40,000 savers will mature on June 1. The Financial Regulator said consumers could save thousands of euro if they used the money from their SSIAs to pay off expensive borrowings.

“For example, a person who has saved a large lump sum in their SSIA and has a five-year €20,000 car loan would save over €2,500 in interest by paying off their loan after just one year with their SSIA money,” said its consumer director Mary O’Dea.

A recent survey by the Financial Regulator found that only 10% of people surveyed planned to use their SSIA money to pay off debts. Many intend to spend the money on a new car, holidays or use it for further savings and investments.

Ms O’Dea said consumers should consider the benefit of allocating even a small amount of their SSIA lump sum towards paying off loans: “Whether you owe a lot or a little, the longer you have a loan the more it will cost you in interest payments and some loans like credit cards can be more expensive than others,” she said, advising consumers to pay more expensive debts, such as credit card balances, first, and then look at other loans.

The Money Advice and Budgeting Service (MABS) — which has reported an increasing number of people struggling with personal debt — supported the Financial Regulator’s call to pay off debt.

“The SSIA savings will give people a possible once in a lifetime opportunity to put their finances on a sound footing by eliminating or reducing expensive borrowings,” said spokesman Michael Culloty.