Reno Charlton, award-winning writer, shares her financial expertise as a contributing columnist for Compare Credit Cards, where you can compare bad credit rating credit cards and instant decision credit cards.
Over the past few years savers in the UK have been bombarded with tempting offers of high interest savings accounts from many financial institutions, including a number of newcomers from abroad, many of which went on to monopolise the UK savings account market. In this highly competitive area some were offering eye-catching rates of interest, and this was persuading many people to stick their spare cash into a high rate savings account rather than pay off their debts.
However, over the past six months the base interest rate in the UK has fallen to its lowest level in the three hundred and fifteen year history of the Bank of England, plunging to just 0.5 percent in March. Whilst this may have been good news for some borrowers, savers had to bear the brunt of these rate cuts, with many left earning just paltry amounts of interest - or even no interest in some cases - on their savings.
When you consider the fact that people are now earning minimal returns on their savings, coupled with the fact that credit card companies are still charging very high rates of interest on credit card borrowing, it is important to get your priorities right. Many industry officials are now strongly advising anyone with high interest debt such as credit cards to use any spare cash to get them cleared rather than sticking it into savings where it will earn little or no interest.
Of course, some people may be worried about doing this in the current financial and economic climate, with some wanting savings as a fallback in case they lose some or all of their income. If this is the case, then it is well worth considering switching your credit card to something like an interest free balance card, so that you can still pay the balance gradually but without being hit by interest charges.
Those that cannot switch to a deal such as this for any reason should bear in mind that if they use any spare cash to pay off their high interest credit card debt, and they then suffer a loss in income, they will have one less debt to worry about, and will still have the credit card to fall back on if the need arises.
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