3.5m Adults Permanently Overdrawn

[trompe le monde]

Couldn't see this posted anywhere today:

http://www.myfinances.co.uk/News/current-a...#036;356845.htm

With 40 million British adults holding a current account, 28 million of whom have an overdraft facility, price comparison website uSwitch finds that 35 per cent of all adults are relying on their overdrafts – 14 million people.

Worryingly, one in four current account holders are permanently overdrawn, while two million workers start the month in their overdraft, even after they have been paid.

uSwitch finds that the average overdrawn balance is £-677, though men appear to be racking up higher overdrafts of an average of £-867. Female current account holders' overdrafts are smaller, at an average of £-515.

Nick White, head of personal finance at uSwitch, said: "Overdrafts are now an everyday part of life, but we are concerned about the increasing reliance that people are placing on them.

"They are no longer seen as a short-term borrowing facility – and for the 3.5 million people in this country who are permanently overdrawn, they are an absolute necessity."

The research finds that 39 per cent of people are now using their overdraft to do their shopping, 14 per cent use it to pay for accommodation, be it their mortgage or rent, while 39 per cent use it to pay for bills.

Mr White added: "With no structured repayment scheme on an overdraft, we are worried that many people will struggle to pay the debt off."

Reliance on overdrafts is not just an ailment of those on low incomes, as the research finds that nearly a third of those surveyed who earn more than £40,000 have an overdraft, with 11 per cent admitting they are permanently overdrawn.

The report adds force to recent calls for greater financial education for Britons.

Mr White said: "What our report indicates is that many people do not even think of their overdraft as a debt in the same way as they would a credit card or a loan – with 44 per cent not even knowing what interest rate they are paying on their regular borrowing.

"At the very least, it is clear that more needs to be done by the banks to communicate the key terms and conditions governing current accounts in 'plain English', and to improve financial literacy amongst their customers."

With this amount of debt, even a .25% IR hike is going to hurt....

TLM

[Guest Charlie The Tramp]

With this amount of debt, even a .25% IR hike is going to hurt....

Just think what rates at 5.25% will do still at a historically low. Could this lead to the meltdown the RBA warned against.

The report is in line with this survey.

The majority of Britons would be unable to cope financially in the event of a minor household emergency according to the Alliance & Leicester. Just 28% said they had money put aside which could be used to replace household appliances, such as a cooker or fridge.

[Elizabeth]

Which reminds me. I must cancel my overdraft. Its pschological trickery.

[2005]

Gotta say most people I know are OK - no mortgage - think a recession is coming and are preparing for a decade of 'it won't be so good from now on'

Because of this I was beginning to doubt the 'end of the world' mantra we sometimes here.

Reading this I now appreciate just how f***ing thick most of the UK population are and am now more convinced than ever that 1) any rise in interest rates or external shock will result in melt down or 2) GB will do anything to avoid this (including giving out tax payers money to prevent it)

I was thinking of Spain (I have relatives there..but I also have relatives in Germany), and Germany is looking good - think I will join a language class.

[Guest Charlie The Tramp]

Gotta say most people I know are OK - no mortgage - think a recession is coming and are preparing for a decade of 'it won't be so good from now on'

In the last downturn I knew many in that position and strangely it appeared not to effect them. It seems those who really needed their jobs were the ones who lost them. It was an old saying of our grandparents, put some aside for a rainy day, for those who did it never rained.