Borrowers using savings to repay credit card debt

Millions of people in the UK have been raiding their savings to repay credit card debts built up over the last few years. It's estimated nearly five million people have 'escaped credit card debt' in the last year alone, by using up an average of 5% of their savings, as reported by thisismoney.co.uk.

A survey by Dutch-owned bank ING Direct found the average savings balance fell by £100 (to £1,684) in the last 12 months. 10% of those surveyed said they'd managed to clear all their debts over the last year.

The average debt for credit cards, unsecured loans and hire-purchase arrangements is currently at £2,513 - an 18-month low - according to ING Direct.

The statistics may come as a surprise to many, given the high - and rising - cost of living across the UK. Petrol prices are now just 1p short of a record high, for example.

Chief executive of ING Direct, Richard Doe commented:

"The report demonstrates that there is a determination among the public to further reduce debts and rebuild savings…but in the current environment it may prove difficult for consumers to realise both of these aims."