According to the debt charity stepchange 2.1 million people are stuck in overdraft. Their research found:
2.1 million people were constantly in their overdraft in 2016
Over three quarters (79%) of our clients we surveyed were constantly in their overdrafts in the 12 months before they came to us for advice
Our clients typically get into overdraft debt to cover essentials; 81% of clients with overdrafts used them to pay for food, living costs, or household bills
This is quite disturbing news and many people are caught in a vicious circle trying to get out of debt.
However, we also see a rise in borrowing, particularly in the car industry. This was commented some months ago by the Governor of the Bank of England Mark Carney.
Our view is people need to try and be prudent with money, set a budget plan and stick with it. We may fancy a new car, but is it necessary? We may want the latest Ipad or iphone but do we truly need it?
Christmas is a time when many overspend, again, we say set a budget and stick to it.
Stepchange also state;
3 ways to reduce the harm caused by overdrafts
In our briefing paper, we make three recommendations that will reduce the harm overdrafts cause. We're calling for:
The abolition of unarranged overdraft charges
Banks to do more to help their clients out of their arranged overdrafts in an affordable way
The Financial Conduct Authority (FCA) to investigate unaffordable overdraft lending
You can view the full information here: