Savings balances rise but debts creep up too

savings rise

savings riseSaving has been a real struggle for many of us in recent months, with everything from high energy bills through to rising food costs continuing to hold our finances back.

However, it seems there is finally some positive news on the horizon, as research from ING Direct shows that the country's savings balances recently reached their highest level in two years.

Savings boost

In the second quarter of 2012, the firm said people's savings typically went up by 9.8% or £182, with falling petrol prices among the factors which have helped.

During the three-month period, the average saving balance rose to £2,040. This means balances have now gone up for three quarters in a row.

Over the period covered by the company's research, a reduction in petrol prices at the UK's forecourts gave hard-pressed savers the chance to stow away an extra £93 in their accounts.

A 7% fall was recorded in the typical price of a litre of unleaded fuel between April and June, with the cost going down from £1.40 to just £1.31.

Commenting on the stats, Richard Doe, chief executive officer at ING Direct, stated: "This marks a two-year high and represents the longest sustained rise in savings since we began tracking at the beginning of 2009. Given other gloomy economic news, it is also something of a surprise."

Keep an eye on your debt

Despite the boost in people's saving balances in the second quarter, the firm warned that unsecured debts have also crept upwards.

It noted that debts on products such as personal loans, overdrafts and credit cards rose by £86 to reach £2,328. Autumn of last year marked the last time the unsecured debt figure was so high.

In this tough economic climate, it is vital that you carefully assess your outstanding debts and work out which should be prioritised first.

While it may be tempting to pay off smaller debts first, bigger payments may have larger interest rates applied to them and, as a result, it could be prudent to focus on these first.