Overdraft statistics

Making your money stretch to payday can be a challenge especially if an unexpected expense arises, which is why many of us rely on the buffer of an overdraft in our bank accounts. We look at the latest overdraft statistics in the UK.

Quick overview

• 30% of UK adults, an estimated 16 million Brits, went into their overdraft in July 2022.
• The average UK overdraft amount per person was £219 in July 2022.
• The total value of UK overdrafts averaged £3.7 billion in the first half of 2022.
• Overdraft interest rates increased from 19.77% in December 2022 to 21.77% in June 2023, an increase of 2 percentage points.
• Overdraft value increased by 31% or £1 billion between April and June 2022, around the time the new energy price cap was introduced.
• Brits use their overdraft for the first time on the 8th day of the month on average.

How much is the average person overdrawn?

The average person in the UK who used their overdraft in July 2022 was overdrawn by £219. In comparison, in the previous month, the average person in the UK who used their overdraft was overdrawn by £255.

How many people use an overdraft?

An estimated 16 million Brits, or 30% of adults, went into their overdraft in July 2022.

StepChange’s latest client report found that, of the people who sought debt advice, overdraft debt declined from 34% in June 2022 to 33% in June 2023. However, clients with overdraft debt increased by 1% between May and June 2023.

Interestingly, in July 2022, the first day Britons used their overdraft was the 8th day of the month on average.

Average overdraft interest rate in the UK

The average overdraft interest rate for June 2023 was 21.8%. This was a similar rate to the previous month.

In the first half of 2023, the average interest rate on overdrafts was 21.4%. In comparison, the average overdraft interest rate for the same period in 2022 was 20.4%.

In 2022, interest rates were lowest in December 2022 at 19.8%. Overdraft interest rates remained highest in 2022 between September and November 2022, with an overall average rate of 20.8%.

In the first half of 2023, effective interest rates grew significantly. By February, overdraft interest rates were already higher than the peak for 2022. The highest interest rate was in April 2023 at 21.9%, an increase of nearly 2% from the same month in 2022.

Until December 2022, overdraft interest rates remained relatively stable, but they have fluctuated more in 2023.

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How much is the total value of UK overdrafts?

The total value of UK overdrafts averaged £3.7 billion from January to July 2022. In comparison, for the same period in 2021, the value of UK overdrafts averaged £3.1 billion, an increase of 16%.

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• Overdraft statistics 2020

  Quick overview

  • 26 million Brits use an overdraft every year, with many of us using arranged and unarranged overdrafts each year.
  • 19 million Brits are using arranged overdrafts, 14 million Brits are using unarranged overdrafts and 7.3 million have both.
  • New regulations are expected to cut the cost of borrowing £100 on an unarranged overdraft from as much as £5 a day to less than 20p a day.
  • On average Brits are borrowing £250 or less on arranged overdrafts and £50 or less on unarranged overdrafts.
  • Overdrafts were estimated to have created over £2.4 billion in revenue for firms in 2017.
  • Up to 8.9 million Brits are potentially being charged overdraft fees they don’t know/understand.
  • Back in 2018, 1 in 4 Brits (25%) admitted to going into overdraft within the year, according to our survey research.
  • In 2018, the average amount Brits were borrowing was £721, putting Britain’s overdraft debt at more than £9.4 billion at the time.

  Who uses an overdraft?

  Millions of Brits use an overdraft every year, but who is actually using them and which type is most popular? An arranged overdraft is the most popular type of overdraft, with 19 million of us using this service every year. Unarranged overdrafts are still popular, with 14 million Brits using these every year, while 7.3 million Brits use both arranged and unarranged overdrafts every year.

  How much are we borrowing from the overdraft industry?

  An overdraft can work well as a short-term buffer until you get more funds into your bank account, so just how much are we using overdrafts? 5 times as much is being borrowed on arranged overdrafts compared to unarranged overdrafts, with most unarranged overdraft borrowing being for less than £50.

  How much do we know about the overdraft industry?

  We conducted a survey of 2,000 British adults to find out just how much we know about overdrafts and how much we use them. 25% of those surveyed admitted to going into their overdraft in the last 12 months, on average by £721. Alarmingly, 68% of those surveyed didn’t know how much interest they were being charged on their overdraft.

  To find out more about how much Brits know about overdraft fees, see our page here.

  When are we using overdrafts?

  An overdraft is a very popular form of short-term borrowing, with those of us with an arranged overdraft dipping into it in 8 out of the 12 months of the year. An unarranged overdraft is slightly less popular, being used in 4 out of the 12 months of the year, on average. Brits also spent more time in their arranged overdrafts, on average staying overdrawn for 7 days on an arranged overdraft and 5 days on an unarranged overdraft.

  The overdraft industry is a big business

  Overdrafts are big business for banks and are a popular borrowing method for consumers. It is estimated that the overdraft industry created over £2.4 billion in revenue for firms in 2017, with 30% of this coming from unarranged overdraft fees. It is also reported more than 50% of banks’ unarranged overdraft fees came from just 1.5% of customers in 2016.

  Due to these figures, the Financial Conduct Authority is clamping down on fees charged to consumers and expects the cost of borrowing £100 on an unarranged overdraft to fall from as much as £5 a day currently to less than 20p a day.

  Sources

  • Competitions and Markets Authority
  • Financial Conduct Authority (FCA)

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