![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/06\/SEC_228587234-eb88.jpg\")
\n\t\tDo you have debt and savings? (Picture: Getty\/Metro.co.uk)<\/p>\n
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\n\t\tDo you have debt and savings? (Picture: Getty\/Metro.co.uk)<\/p>\n
If you\u2019re one of the 62% of UK adults that has some form of debt<\/a>, Martin Lewis<\/a> has some advice for you.<\/p>\n In the latest edition of his newsletter, the Money Saving Expert founder<\/a> shared tips on how to boost your savings<\/a>.<\/p>\n However, he also explained three reasons you shouldn\u2019t \u2018save without first checking\u2019 if it\u2019s actually the best option.<\/p>\n The first of these is for those who owe money on products like credit cards or personal loans.<\/p>\n According to Martin<\/a>, it\u2019s \u2018usually best to use spare cash to clear [debt] first\u2019 especially if it\u2019s a high interest form of borrowing.<\/p>\n Noting that this goes against common guidance to put away cash for a rainy day, he explained the reasoning<\/a> behind the theory.<\/p>\n \t\t If you have \u00a31,000 debt on a credit card at 25% APR, this costs \u00a3250 interest over the course of the year. <\/p>\n Conversely, \u00a31,000 in a savings account at 5%\u00a0earns\u00a0\u00a350\u00a0in interest over a year, meaning it costs \u00a3200 a year less if you focus on repayments over building your nest egg.<\/p>\n \u2018It\u2019s that simple,\u2019 Martin said. \u2018Debts usually cost more than savings earn. Cancel them out and you\u2019re better off.\u2019<\/p>\n \t\t\t\tExceptions to the ‘pay debts before saving’ rule\t\t\t<\/p>\n While for many, it\u2019s better to prioritise debts over saving, Martin highlights scenarios when this isn\u2019t actually the case.<\/p>\n The first is \u2018the penalty exception<\/strong>\u2018, which is when you\u2019re locked into the debt, and will be charged a penalty for paying it off early. This is often the case with mortgages, as well as some loans.<\/p>\n The second is \u2018the interest-free\/very cheap debt exception<\/strong>\u2018, when the interest rate on your debt is less than the amount your savings earn after tax. You\u2019re most likely to encounter this when it comes to 0% introductory credit card offers, 0% overdrafts, and student loans.<\/p>\n When it comes to the latter, the MSE founder says that \u2018providing you\u2019re financially disciplined, you can profit from building up savings and keep the debts,\u2019 in effect \u2018being paid on money lent to you by the banks for nothing.\u2019<\/p>\n The financial guru<\/a> says he finds it \u2018deeply frustrating\u2019 that many people are both borrowing and saving at the same time, since banks are \u2018essentially lending you back the money you lent it, except charging you much more.\u2019<\/p>\n In terms of the debt you should deal with first, it pays to focus on the most expensive form. See if you can lower any of your interest rates, then put any savings or spare cash into repaying the most costly, and this \u2018should massively reduce your costs.\u2019<\/p>\n But expensive credit cards and loans aren\u2019t the only factor that might mean your cash works harder outside of a savings account.<\/p>\n Overpaying your mortgage<\/p>\n Are you a homeowner? Martin claims making mortgage overpayments could save you more in the long-run than putting the money in a savings account.<\/p>\n He explains that this is likely the case \u2018if your mortgage rate is the same or higher than you earn in savings\u2019, but recommends checking the MSE overpayment calculator<\/a> to see the benefits based on your specific situation.<\/p>\n \t\t\t\tDon’t miss our Money tips! Add us as a Preferred Source\t\t\t<\/p>\n At Metro Money, we’re here to bring you all the latest news and advice on personal finance, cost of living, saving and investing. As part of our vibrant community of highly engaged readers, we want to make sure you never miss our articles when searching for stories.<\/p>\n Click the button below and tick\u00a0Metro.co.uk<\/strong>\u00a0to ensure you see stories from us first in Google Search.<\/p>\n \nAdd us as a Preferred Source<\/a>\n<\/p>\n \t\t \u2018The gains can be worth \u00a31,000s, sometimes \u00a310,000s \u2013 not to mention the extra years of being mortgage-free,\u2019 Martin adds. \u2018But working out whether to overpay\u00a0your\u00a0mortgage requires some consideration.\u2019<\/p>\n Investing<\/p>\n According to the consumer expert, \u2018saving is investing\u2019s poorer cousin\u2019.<\/p>\n So while he highlights the importance of a cash emergency fund \u2013 ideally three to six months\u2019 worth of expenses (including the likes of loans, mortgages and other fixed repayment borrowing) \u2013 Martin warns a savings account \u2018isn\u2019t always the winner\u2019 for money you don\u2019t need within the next five years.<\/p>\n<\/p>\n \u2018As a nation, we underinvest,\u2019 writes MSE. \u2018Even if you put money in the top-paying savings accounts over the last decade, it would have lost value compared to inflation. That means in real terms, even in savings, your purchasing power would\u2019ve shrunk.\u2019<\/p>\n On the other hand, the same amount invested in a tracker fund, which mimics the performance of a major stock market index such as the FTSE 100 or S&P 500, it would have grown up to ten times higher.<\/p>\n Keep in mind, investing carries risk, and not only are there no guarantees you\u2019ll make money, there\u2019s the potential you could lose what you put in. It\u2019s also vital to see your portfolio as a long-term route to returns rather than a quick fix.<\/p>\n Martin\u2019s golden rule on this is simple: \u2018Only invest money you won\u2019t need for\u00a0at least five years, after clearing expensive debts first and building an emergency fund, and put it in a broad spread of investments.<\/p>\n \u2018If you don\u2019t have money that fits this, I\u2019d say you\u2019re not ready yet. It must be money you don\u2019t need day-to-day.\u2019<\/p>\n Arrow Arrow Arrow![\"Close](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/06\/GettyImages-1408404108.jpg\")
\n\t\tIt\u2019s all about what costs less in the long-run (Picture: Getty Images)<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/02\/SEI280784796-2946.png\")
\n\t\tOur Money experts are here to give you the latest tips and insider guides<\/p>\n
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