Wednesday, May 27, 2009
Category:
Consolidation
According to moneysupermarket.com, workers that are not able to stay in credit are now going into their overdrafts 20 days after pay day – an entire week earlier than in 2007.
Two years ago the same price comparison website conducted similar research and it was found that workers were then avoiding going into the red for 27 days following pay day. When comparing this with the present figure of 20 days, it becomes apparent that people are currently struggling somewhat with their finances.
During the past 12 months, over 50 percent of the workforce became overdrawn on at least one occasion, whilst for 17 percent this was a common occurrence. The latter marks a 10 percent increase on 2007.
Head of banking at moneysupermarket.com, Kevin Mountford, commented: "The 20th is now the date each month that Britain goes overdrawn.
"These findings are a little disconcerting, especially given the direction interest rates have been heading lately.
"We have found the difference between overdraft rates and in-credit rates has increased by nearly four percentage points over the past year - with it now averaging 12.4 per cent. This is most definitely a time for prudence with your current account.
"Your overdraft can be a murky place to reside - especially if you are close to the edge of your authorised limit. Unauthorised rates are higher and have sharp penalty fees of up to £35 for breaching your agreement.
"The Office of Fair Trading has been investigating current accounts for some time now, but many banks still levy these hefty charges for exceeding your limit.
"People who continually find themselves in the red should look closely at their spending to see where they can save. Anyone who fears they may exceed their overdraft needs to speak to their bank to see about temporarily increasing their limit to avoid being stung by unauthorised charges.
"If, like 53 per cent of the population, you are often in the red, you need look out for the best overdraft deals, such as from the likes of Abbey and Alliance & Leicester."
……………………………………………………………………………………………………
Homeowners whose finances are tight may wish to consider taking out a secured loan. Such a finance option could be used to
consolidate existing debts, such as credit cards, into one manageable monthly repayment as opposed to juggling several. In addition, monthly outgoings could also be reduced. When taking out a debt consolidation loan, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
