Four and a half million Brits permanently in the red
The research found more than one-third of Brits (35%) have used their overdraft in the past twelve months, with those aged 18-34, (49%) the most common users of an overdraft facility. Over a third surveyed claimed they would cut back on their spending or dip into their savings as a first step to manage their finances, before going into the red.
Of those who have gone overdrawn in the last twelve months, over a quarter (27%) ended up in their overdraft just 15 days after they have been paid. 7% hit the red zone within five days of being paid.
Kevin Mountford, head of banking at MoneySupermarket.com, said: “Times are hard for UK consumers with many people either out of work or receiving no pay increase despite the high cost of living. It’s therefore no surprise to see many Brits living in their overdrafts or being forced to dip into it throughout the year to help cover these costs.
“However, it’s encouraging to see people taking a sensible approach to tackle their overdraft by looking at ways to cut back on spending or using their savings. When used wisely, an authorised overdraft facility still has an important part to play in the nation’s finances as it can offer an invaluable buffer for unexpected costs. It’s essential if you use an overdraft to ensure you have always agreed this with your bank and don’t be tempted to stray over your limit as the cost of unauthorised borrowing can rocket.”