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UK consumers cut back to pay off credit card debts

A survey by Legal and General has confirmed that 20% of the UK population are currently saving money to pay off their credit card debts from Christmas. While this is probably to be expected, as many in the UK did not budget for a prolonged recession and possible depression, the significant number of people saving to pay off their credit card debt will hit spending in the overall economy. It appears that many of the UK population have finally woken up to the magnitude of the problems facing them which should see short-term pain but longer term gain.

However, rather alarmingly the Legal and General study also confirmed that 4 out of 5 savers are not contributing to their pension schemes because of debts elsewhere. While again this is perfectly understandable in the current economic environment it raises the potential for future pension premiums to be slashed to the bone which will in due course impact upon the overall value of pension funds on retirement.

However, for those who expect credit card debt to fall substantially over the next 12 months there is also the news that up to 10,000,000 UK credit card holders plan to use their cards for everyday purchases which is sure to increase credit card debt in due course. The UK appetite for debt would appear to be as large as ever.

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