- 03
- Jan
According to a recent survey there are over two million people who are permanently overdrawn and fall into the red twenty-seven days after payday. The survey went on to show that almost half of Britons who work have slipped into the red at least once in the past twelve months, which means that more than ten million people have fallen into the red at least once with a further 2.1 million who are continually overdrawn.
It is estimated that for the first twenty days of the month many people are able to stay in the black, however on average most people end up falling into the red 27 days after payday, with the typical payday being the 24th of each month. These findings come as no surprise, especially with the current rate rises from the Bank of England. Because of the five interests rate hikes over the past eleven months many consumers are starting to feel the pinch and are struggling to make ends meet. Although the Bank of England recently dropped the base rate by a quarter point, many lenders are slow to pass this on to their customers and it is only a tiny amount compared with the sharp rises experienced in the past year.
As more people struggle to pay all their bills, mortgages experts advise consumers to beware of overdraft interest rates. Because a large number of working people are constantly living in the red it is advised that they be aware of the interest rate that is being charged on their overdraft, as well as the fees that banks may charge if you go over the authorised limit. By going over the authorised limit you are then risking having your account charged a sharp penalty for breaching your agreement. These fees can then add to your debt meaning that more people end up dipping into their savings.
For many, the high rate of overdraft interest (which is stealthily applied and rarely advertised on bank statements), can be the equivalent of borrowing double on a cheap loan. This means that taking out a debt consolidation loan to clear high rate credit cards plus a constant overdraft can be far cheaper for debt-ridden consumers.
