Four in ten adults in the UK (41 per cent) do not know what charges they will incur should they exceed their agreed overdraft limit, meaning they run …
Four in ten adults in the UK (41 per cent) do not know what charges they will incur should they exceed their agreed overdraft limit, meaning they run a huge risk of getting caught short at the end of the month, according to new research by M&S Bank.
The company surveyed 2,000 adults and asked them about their banking habits. It found almost a third of people (28 per cent) use their overdraft facility, with half (51 per cent) incurring a fee for going over the authorised limit agreed with their bank.
Males appear to be the most likely to creep past their limit, with 55 per cent admitting they incur charges regularly. Those aged 18-34 were the most likely to use their overdraft, with 37 per cent saying they did, compared to just 15 per cent of over-55s.
The research also found consumers do not often keep track of their finances, with only a quarter of people (26 per cent) checking their bank account on a daily basis. In fact 15 per cent of respondents admitted to only checking their account every fortnight or sometimes once a month.
Though people are checking their bank accounts, a high proportion do not set a monthly budget. Some 78 per cent admitted to not planning ahead with their finances, leaving many short at the end of the month. This could explain the reason for so many people falling into their overdrafts and having to pay charges.
It is the over-55s who were found to budget the least, with only 13 per cent setting out a monthly plan to track their finances, compared to 32 per cent of 18-34 year olds.
On top of this, 48 per cent of individuals do not use direct debits to manage their monthly outgoings.
Chief executive officer of M&S Bank Colin Kersley said: "It's surprising how few set up direct debits or keep a monthly budget, which can be really useful to ensure you've planned for all your regular monthly outgoings."
M&S Bank listed five things people can do to help keep them on track with their finances:
1. Set out a monthly budget – allocating a set amount to spend on certain things each month will help to ensure individuals stay within their means.
2. Set up monthly direct debits – paying for things by direct debit means people are less likely to forget about payments. Many people often fall into credit card debt as a result of missing monthly payments by mistake.
3. Check statements regularly – keeping an eye on what is coming into and leaving an account will naturally help people keep on track of how much money they have available to them at any given time.
4. Be aware of any charges, such as any overdraft facilities – by knowing what the charges are, individuals will know what to expect at the end of the month and can then budget accordingly.
5. Ensure banks offers relevant services – some prefer to interact with their bank face-to-face, while others choose to use online or telephone banking and these services can certainly help people with their money management.
By Joe White