Brits lower debt

For the first time in at least eight years, Brits have paid off more debt then they have accumulated.

Brits repaid a staggering £38.6 billion worth of non-mortgage debt, more all they had borrowed in both 2007 and 2008, Unbiased.co.uk found, the first instance of this in the course of the eight-year study.

By the last quarter of 2008, £1.76 in debt was paid off for every pound saved.

However, paying off debts has not been a clear focus throughout all of 2008. The first half of the year, Brits continued to take out over £23 billion in new debt, borrowing 66 pence for every pound saved.

David Elms, chief executive of Unbiased.co.uk, said: "2008 was a year of two halves in terms of people's financial behaviour.

"The financial turmoil which hit Britain last summer prompted a dramatic retreat from savings in favour of starting to pay down personal debt.

"This shift itself is no surprise, but its severity confirms the historic impact of the credit crunch on consumer behaviour and evidence suggests this repayment trend is continuing at pace."

Savings levels during the second half of the year, however, plummeted 45 per cent, from £67 billion in the first half of the year, to £37 billion during the second half.

"There is an awful lot of consumer fear and confusion out there right now, and it is vital people seek professional advice from an IFA to enable them to strike the best balance between borrowing, saving and other aspects of their finances throughout these difficult times," Mr Elms said.

You can also obtain details of local independent financial advisers to talk though the most suitable savings options for you by visiting Unbiased.co.uk.