Tuesday, March 9, 2010
Category:
Personal Finance Tips
According to moneysupermarket.com, 10 percent of British adults are ‘permanently in their overdraft’ whilst 12 percent go into their overdraft a minimum of five times per year.
Furthermore, the comparison website’s research has shown that 38 percent of bank customers have utilised their overdraft facility during the last year. These figures reportedly ‘demonstrate an improvement’ compared to 12 months ago when they stood at 17 percent, 15 percent and 52 percent respectively.
Head of banking at moneysupermarket.com, Kevin Mountford, commented: "Whilst it is encouraging to see less and less people reliant on their overdrafts, we should be concerned that there are still such a large number of people permanently overdrawn. With rising inflation, it is going to be difficult for many to break the habit of living in the red, and it may be that more people will fall back into this position as living costs increase."
"The charges attached to overdrafts have been at the forefront of the news agenda over the last couple of years, with the courts eventually deciding the banks can penalise those who go overdrawn in whatever way they choose, without interruption from the Office of Fair Trading (OFT). The dangers of being overly, or entirely, reliant on your overdraft are clear; firstly this can be an extremely expensive debt to carry if it hasn't been agreed with your bank in advance, and secondly your bank can reduce the size of your overdraft with little warning.
"Consumers should always consider the ways in which they use their current account, and make sure they have the right product to match. For example if you dip into your overdraft on a regular basis, your main concern should be minimising the costs of going overdrawn; but if you're never overdrawn you might want to look for other benefits, such as charges for use abroad or in credit interest rates."
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Homeowners who would like to re-organise their finances – particularly any existing credit – could consider taking out a secured loan for consolidation. One of many finance options available, a secured loan could be used to tie up borrowings such as credit cards, store cards and personal loans into one manageable monthly repayment. In taking this approach borrowers could be left with a single monthly repayment that is lower than the sum of existing outgoings. However, if opting for a secured loan to
consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
