The Money Stop

A recent report has highlighted that by the 20th of each month many Brits find themselves running out of cash and having to rely on their overdrafts to see them through the rest of the month until payday.

In some cases, once payday comes around, Brits are able to slide back into the black for several weeks. However, there are also many Brits that will go straight back into the red, even after their salary has been paid in, because their accounts are permanently overdrawn.

Around two million consumers in the UK are always in the red, unable to pull themselves out of their overdraft debt and therefore having to rely heavily on their overdraft facility. In the past year, according to research, around ten million people in the UK have used their overdraft on at least one occasion. Rising interest rates and repayments may have contributed to this figure, with more and more people having to dip into their overdrafts in order to stay afloat due to rising repayments.

One industry professional stated: ‘It’s no surprise so many people are permanently in the red – with interest rates having risen five times in the past year consumers are not doubt feeling the squeeze. People often dipping into their overdraft need to watch the Effective Annual Rate as some can be punitive and they may find they are better off spending on a 0% credit card in the future.’

Those aged 55 years and over were found to be the best at staying out of the red, with an impressive 64% in this age group managing to stay in the black. This compared to 40% of 18-24 year olds. In the 45-54 age group 5% were permanently in the red.

Tom Smith
31st July 2007

Related Posts

No interest will be charged on A&L overdrafts

Another bank has revealed its new charge structure with regards to overdrafts and bounced cheques. According to recent reports the Alliance and Leicester will now no longer be charging any interest at all on its

NI bankers may get interest-free overdrafts

People who do their banking in Northern Ireland (NI) may soon benefit from interest-free overdrafts.That is after a report released by the Competition Commission which has been looking at ways of increasing competition and lowering

People advised to stick to credit purposes

Consumers should use financial products for their "right purposes", according to Sainsbury's Bank. Steve Baillie, head of loans at the bank, explained that using personal loans, credit cards and overdrafts for the correct purposes will

Overdraft interest rates go up

Recent reports have indicated that some banks and lenders have raised their overdraft interest rates by huge amounts over the past year, by far exceeding the interest rate rises that have been imposed by the

Londoners most keen on living abroad

People living in London are the most likely in Britain to take out a mortgage on a foreign property.New research by Bank of Scotland International (BSI) shows that eight per cent of Londoners already own

Don’t rely on credit for household bills, says expert

People should refrain from using credit, loans and overdrafts to pay their household bills, the money education charity Credit Action has said.Although people have been increasingly using these facilities in the past year, the organisation

Debts hitting the young

Debts are hitting the young, with over half of England's teenagers having experienced debt by the time they are 17, according to a new survey.The survey, by pfeg (Personal Finance Education Group), found that 90

Church to offer financial advice

The Church of England (CoE) has announced it is to launch a 'Matter of Life and Debt' campaign in the face of spiraling levels of personal debt in the UK. With the UK owing a