Fundamentally, having savings sitting in an account can feel emotionally rewarding. However, it’s technically not the right financial decision if you have outstanding debt.
For example, a credit card might have an interest rate of 15% and it is extremely unlikely that your savings are returning more than that. But what if you have an emergency?
For example, £5,000 worth of debt at 15% interest is costing you £750 per year. Whilst if it was sat in a savings account with 1% interest, this is only earning you £50. By using your savings to pay off debt, you have saved £700 a year.
In addition, if you have an emergency you can always use the credit card and you’d be no worse off. Hopefully, the chances of an emergency happening are low.