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Savers urged to reduce borrowing levels ahead of interest rate rise

Financial expert advises Brits to reduce the amount they borrow before they are stung by a rise in interest rates

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31 January 2012

Savers urged to reduce borrowing levels ahead of interest rate rise”

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UK consumers with savings should reduce their borrowing levels ahead of a potential rise in interest rates, according to an industry expert.

Mark Bower, managing director at financial advice website moneymaxim.co.uk, claimed that any interest earned on a savings account is likely to be cancelled out by the high rates of interest accumulated on debt.

He said: "For those who do have savings we are recommending they consider reducing their current borrowing levels ahead of any interest rate increase, particularly as the interest that is earned on savings is as low as it is at present."

Mr Bower added that it is still advisable for UK households to have easily accessible savings in order to protect them against any change in their circumstances, such as illness, accident or job loss.

Earlier this month, the Bank of England's Monetary Policy Committee (MPC) voted to keep interest rates at their record low of 0.5 per cent. The base rate has remained at this level since March 2009.

Posted by Jack Ramsey

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