A Quarter of Britons Fall into their Overdraft a Few Weeks After Pay Day
According to Thinkmoney, more than a quarter of Britons drop back into their overdraft just 17 days after pay day.
The UK budgeting website surveyed 2,000 current account holders and found that 27% go overdrawn halfway through the month.
While more than a third of bank customers claimed they will use their overdraft at some point after pay day, 1% reported that they will spend the whole month inside their overdraft.
Ian Williams, a spokesmen for Thinkmoney, commented: “An overdraft should be a safety net, there to help when something goes wrong. But it appears for many people, being overdrawn has become the norm. In fact, many don’t regard it as a debt, but it is and spending most of the month overdrawn is a worrying position to be in.”
Most overdrafts are commonly calculated using an equivalent annual rate, which is comparable to the APR charged on product loans. However, many banks are introducing flat-fee overdraft charges that can result in significant interest charges – which can be higher than rates charged by payday lenders.
The survey found that an alarming number of younger people between 18-24 will often enter their overdrafts, as 50% stated they will use their overdraft at some point over the month.
Overdrafts can result in significant debt problems when not used responsibly. Those struggling with debt should consider contacting a DEMSA approved company, who can provide reliable debt consolidation advice and help to eliminate financial problems with long term repayment plans.
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