It’s not always that people have enough money to spend for their daily needs. This is true even for men and women whether single or married who are earning a living. Sometimes, the monthly income one receives from his or her work is just not enough to make both ends meet.

What happens often is that borrowing money and availing of credit becomes a necessity. Sadly, this habit is also a major contributor to people’s going into debt. When loans and credit card bills are not paid on time, this can lead to a higher balance already difficult to pay and eventually debt when not settled immediately.

Research by the Office of Fair Trading revealed that in the USA, one in three people are pressured to avail of credit when presented to them and one in five sign credit agreements which they actually regret. It’s been found as well that majority of consumers don’t always read the terms and conditions when signing credit agreements.

With this kind of financial situation facing them, borrowers eventually get confused about their priorities by the time they have enough money. Those who are eager to save money for their future and those who want to pay their debts right away often ask a common question about which they should give utmost attention.

Many people in the USA today are overpaying for their loans. According to an analysis by Mark Vern, this has put the overspend on debt amounting to as much as 35 million sterling dollars each year. These usually come from personal unsecured loans including payday and cash advance, credit cards and mortgages which otherwise could already have allowed each household to save some 2,700 dollars.

The firm further pointed out that consumers could have saved much if only they were better educated about the loans and other forms of credit they availed of from various providers. For instance, those who took out loans on variable interest rates can actually move to the fixed and discount rates to enjoy savings. For people fond of using the credit card, instead of going for the plastic that charges from 10 to 16 percent interest rates on outstanding balances, they can move to one that charges zero rates. For the unsecured personal loans, a better way to save money is to transact with online providers rather than the traditional firms. By choosing short term lenders that do business on the internet, applying for loans and getting approval is faster and easier these days.

Financial experts strongly believe that people are better off paying their debts for now. This should be their priority above anything else if they want to lead a worry free life in the long run. This is also due to the fact that outstanding debts can easily accumulate interest over time which could make it difficult for average income earners to pay if they continue to ignore them. Another major reason is that savings earn little interest at this point in time especially with banks offering very low rates that are not attractive at all. With savings rates ranging from only four to five percent a year offered on 100 dollars, for instance, many people would think twice about putting their money in a bank.