Savers should expect a tough 2010

Inflation is expected to continue to soar in the coming months, the Bank of England has said - meaning that savers may be better off paying down existing debts

In its quarterly Inflation Report, the Bank said it expected the CPI measure of inflation to rise above three per cent in the near future.

At the same time, it was indicated that monetary policy would remain tight for some time. This means that interest rates are likely to remain low for several months yet.

Kevin Still, director of Atlantic, said that, "for those that have disposable income, clearing debts may be the best way of using spare cash. This is especially true on credit card debts, where interest rates have been rising alarmingly".

He added that "it is better to consistently over pay on the credit card debt repayments than make one large over payment and then possibly leave yourself short a couple of months later."

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