Quarter of people go regularly overdrawn

Up to one-quarter of people across the UK are regularly being pushed into overdrafts by the midway point of each month, new research has shown.

According to research from thinkmoney, 27 per cent of UK adults are utilising overdrafts by the 17th of every month, meaning that their pay packets are typically lasting for just two weeks before their finances go into the red.

Moreover, this figure does not include the one per cent of respondents who said they permanently live within their overdraft.

In total, more than one-third (35 per cent) of adults use an overdraft facility at some time or another, while one-in-five people (21 per cent) stated they are using their overdraft within just one week of their payday.

Worryingly, more than one in ten (13 per cent) respondents said they are back into their overdraft just one day after being paid.

Younger people were more likely to be using overdrafts for at least some of every month (50 per cent of 18 to 24-year-olds), with older Brits far less likely to do so – just 21 per cent of over-55s are regularly in this situation.

Spokesman for thinkmoney Ian Williams says: "An overdraft should be a safety net, there to help when something goes wrong.

"But it appears for many people being overdrawn has become the norm. In fact, many don't regard it as a debt, but it is and spending most of the month overdrawn is a worrying position to be in."

Individuals need to remember that an overdraft is actually a form of borrowing and many banks will charge for the use of this service. It is therefore advised that overdrafts are only used when it is absolutely necessary, as being regularly in the red can end up making it harder for people to budget effectively.

Posted by Amy White