A financial expert recently advised that when money is tight due to economic hardship, it’s better to raid your savings account than it would be to run up bad debt.
The expert continued, saying that taking out your credit card to finance the purchase of necessities is a poor choice for a number of reasons, especially when you have available savings to tap as an alternative.
Since the global banking crisis has led to a worldwide economic downturn, there are many savers that are facing particularly tough challenges in regards to finding sufficient cash to make payments on necessities like utilities and mortgage payments. According to an expert spokesperson from impartial financial news website candidmoney.com, however, resorting to such financial strategies such as overdrafts or credit cards is a poor problem solving choice indeed.
The website’s financial expert advised that, due to the extremely high interest rates on many credit cards make the choice to raid a savings account an astronomically better choice.
About one third of all existing savings accounts pay out an annual interest of 0.1 per cent or less, explained the website’s specialist, while the average rate charged by overdraft and credit card facilities is in excess of 16 per cent.
The spokesperson concluded that withdrawing money from your savings account in order to make up any shortfalls in regards to payments on essential and necessary items, such as utilities or monthly mortgage payments, is something that should be considered first before resorting to borrowing the cash to do so, especially in the present economic landscape.
In related news, data recently published investment management firm Schroders showcased how UK consumers have drawn down approximately £60 billion combined from their savings accounts over the past 12 months to fill the gaps created by shortfalls in their income streams.