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Increasing numbers living in their overdraft

Increasing numbers living in their overdraft

Category: Banking

Updated: 04/04/2011
First Published: 21/09/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

New figures have laid bare the worrying number of people that are consistently living in their overdraft.

Almost eight in ten (78%) Britons have an overdraft facility as part of their day-to-day bank account, with 24% of them claiming they couldn't live without it.

The research by Groupola.com also found that 18% of bank customers with overdrafts were constantly 'living' in them, meaning they are rarely, if ever, out of debt.

At the other end of the scale, 21% of bank customers with an overdraft said they had agreed to the facility but would only use it in emergency situations.

Despite an over reliance on overdrafts, many people said that they were unaware of the interest they paid on their borrowings.

Just 6% of those with an overdraft said they never need it, although just 2% of respondents said they had taken the decision to cancel an agreed overdraft limit.

This could be having a harsh impact on many as recent figures from the Bank of England showed that overdraft rates are currently at an all time high.

In addition, Moneyfacts.co.uk research shows that more than a quarter (26%) of current accounts have been the subject of increases in authorised overdraft rates over the last year and a half.

Some consumers will have seen the cost of their overdraft increase by up to 8.40% over the past 18 months.

If your overdraft rate is spiralling out of control it could be worth checking the Moneyfacts.co.uk Best Buy tables to see what else is on offer in the current account market.

As well as lessening your overdraft rate, you may benefit from a cash incentive to switch.

Find the best bank account for you - compare bank accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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