Should You Stop Saving to Repay a Loan or Credit Card?

11 September 2026

It can feel like you have to choose: save money or pay off your debt...

Paying off borrowing sooner can mean paying less interest overall and becoming debt-free faster. But stopping your savings completely can leave you without money to fall back on when an unexpected expense comes along. 


So, should you stop saving to repay a loan or credit card? Not always. 


Should you save or pay off debt first? 

There are good reasons to do both. 


If you're paying interest on your debt, making extra repayments could help you pay less interest and clear your debt sooner. 


But having some savings means you have money to fall back on if something unexpected happens. 


Your car could break down. Your boiler could stop working. You could get an unexpected bill. 


Without savings, you may have to use more credit to pay for it. 


For some people, the answer may be to keep saving while paying off their debt. 


How much should you save while paying off debt? 

There is no set amount that everyone should save. 


It depends on your income, your bills, your existing savings and the type of borrowing you have. 


If money is tight, even a small amount each month can help. 


For example, saving £25 a month would give you: 

  • £300 after one year 
  • £600 after two years 
  • £1,500 after five years 


That's money you could have available when you need it, rather than having to rely on more borrowing. 


What about interest on your borrowing? 

When you're paying interest on your debt, paying it off sooner can mean paying less interest overall. 


It can also help you become debt-free sooner. 


But using all your savings to repay debt could leave you without a financial cushion. One unexpected expense could mean needing to borrow again. 


TIP: Check the terms of your loan or credit card before making extra payments. Some types of borrowing may have different rules or charges for paying early. 


Could saving while you repay help? 

Some products are designed to help you save while paying off a loan. 


First Defence Finance loans have something called Save As You Repay, a scheme that lets you make a regular savings payment alongside your loan repayment. 


For example, saving £25 a month for five years alongside your loan repayment would give you £1,500 in savings, before any interest or other returns. 


So, when your loan is paid off, you could have both a cleared loan and money in your savings account. 


For more information about First Defence Finance and their loans for military personnel and veterans, go to their website: https://www.firstdefencefinance.co.uk/ 


What's the right choice for you? 

There is no rule that says you have to stop saving until your debt is gone. 


If you can afford it, saving a small amount while making your regular debt repayments could help you build a financial cushion and reduce the chance of needing more credit when an unexpected cost comes up. 


The right balance will depend on your circumstances, including your budget, your borrowing, and how much you already have saved. 


The important thing is to look at the bigger picture. You may not have to choose between saving and repaying debt. 

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