A Third of Adults Cling to Overdrafts
A worrying number of people are relying heavily on their overdrafts for financial support, according to worrying new figures from uSwitch.
A third of UK adults are relying on overdraft facilities to get by, according to new research from uSwitch.
The price comparison website found that 35 per cent of the 28 million current account holders who have overdraft facilities (14 million people) use them each month to supplement their income.
It also found that one in four are overdrawn permanently, even after they have been paid, and that 39 per cent depend on an overdraft to make essential mortgage and bill payments.
According to uSwitch's findings the average account holder is £677 in the red. They also show than men are the worst culprits when it comes to relying on overdrafts, notching up an average balance of £867 compared to £515 for women.
Nick White, head of personal finance at uSwitch, said: "Overdrafts are now an everyday part of life, but we are concerned about the increasing reliance that people are placing on them.
"They are no longer seen as a short-term borrowing facility and for the 3.5 million people in this country who are permanently overdrawn, they are an absolute necessity."
He said that because overdrafts have no structured repayment scheme there is a concern that many people will struggle to pay off the debt, and so more must be done to educate consumers about prudent financial management.
"At the very least, it is clear that more needs to be done by the banks to communicate the key terms and conditions governing current accounts in 'plain English', and to improve financial literacy amongst their customers," he said.
