Savers pile it up, card debt leaps

A tale of two personal finance consumers emerged today as those who can afford to save banked their cash at the fastest rate in six years while those who cannot are heaping more and more on their credit cards.

Official figures from the Bank of England revealed that unsecured borrowing leapt to £1.4 billion in May, up from £1.1 billion in April and around 17% higher than the six-month average.

Howard Archer, chief economist at Global Insight, said the figures showed a disturbing fundamental undercurrent. The figures suggestmore and more people are unable to save as their purchasing power is squeezed and there is likely to be higher distressed borrowing over the coming months as people struggle in the face of higher food prices and utility bills as well as increased mortgage payments."

The Building Societies Association said savers are taking advantage of higher rates available, with £853 million deposited in society accounts in May.