Large Numbers Permanently Overdrawn On Bank Accounts March 31st, 2010
There has been a growing problem with personal debt in the UK over the course of the past few years. Borrowing on personal loans, credit cards and overdraft facilities has spiralled recently and shows little sign of slowing down, despite many people making a special effort to repay their loan and other debts.
A growing concern at present is the increase in the use of overdraft facilities amongst individuals. A recent report has revealed that as many as one in ten individuals in the UK are living on their overdraft facility and that some people remain in the red on their bank account on a permanent basis, never clearing their debt even when their salary goes into their account.
This percentage equates to somewhere in the region of five million people across the UK who remain overdrawn for the majority of the time and a large proportion of these individuals have very little idea of exactly what interest rates they are currently paying on their overdraft facilities.
Overdraft charges on bank accounts vary widely, in the same way that personal loan and credit card rates can also do, but for someone who uses their overdraft regularly, it is worth checking up on the rates payable as rates can be around five times higher with some banks than with others.
Some banks also charge a monthly fee every tie a customer uses their overdraft. For someone who perhaps only dips into their facility once a month before payday, this could also work out extremely expensive for what they are actually borrowing.
One simple and cheaper solution to the problem is to take out a personal loan or debt consolidation loan to repay any long term overdraft balances. It is likely that the interest rate on the loan will be much cheaper than that of an overdraft, although borrowers should take care not to dip back into the overdraft once it has been repaid.