Saving More Could Reduce Debt Pile

8th February 2018.

According to a new survey, more than one in four households are putting their personal finances in danger by having no emergency savings pot.

Some 27 percent of people in the UK have been found to be without savings, taking out loans on credit, and putting their financial comfort at risk. The ING International Survey found large numbers of homeowners suffering from debt and personal loans, with some relying on credit cards to purchase the essentials. People are not saving for that rainy day, and are allowing high-interest rates and inflationary pressures lead them to purchase too much on credit without the means to pay it back. The business world is also struggling to be financially resilient, as very few business owners think to preserve some extra cash to lessen the impact from another Carillion disaster.

Here at the Credit Protection Association, we deal with many business owners who fall into financial turmoil. Some of our members will run up a large debt on credit and forget to pay it back, while some are paying the price for their customer’s financial woes. It is important that businesses prepare for worst case scenarios; whether that’s credit checking your customers or just putting aside a little nest egg for a rainy day.

The recent survey found that within the UK, 12 percent of those surveyed had debt from a personal loan, 27 percent had credit card debt, 13 percent had an overdraft, 7 percent owed money to friends and family and 8 percent had student loan debt.

Across the international survey, the most common debt type in most countries was found to be a personal loan.

Ian Bright, senior economist and managing director of group research at ING, said: “The number of households with limited savings indicates how financially fragile many people are.

“Many simply do not have any money left at the end of the month to put aside. But there are also those who could save but don’t.”

Saving is simple in theory, and in practice, it’s a little harder. You may set out to save a bit a month, but then your computer breaks down, your most important customer falls sick, or you feel its imperative to follow your competition into an upgrade. This is why preparation is important. Whether you’re a consumer or a business owner, it is important to maintain some financial cushion in case future events demand it. It can start small, and then you can gradually increase it as your business year gets stronger.

Simply looking ahead can make all the difference. Setting up a standing order to put a small amount into a savings account every month is small, but significant. It can be hard to do it alone, and sometimes it is worthwhile gaining some outside help. Consumers can take advantage of accountants and (personal) debt collection agencies, and businesses can look to the Credit Protection Association. Here at CPA, we offer our members credit reports and monitoring software to ward off shady late payers and the grips of bad debt. Our debt collection service also frees up cash flow so our members can save and spend freely, without the worry of hefty interest rates that personal and business loans can deliver.

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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