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How much are Brits really paying in overdraft fees?
Two in three Brits (68%) with an overdraft don’t know how much they’re being charged
If your budget is a bit stretched towards the end of the month, you may think that an overdraft is a good solution to be able to afford that night out you’ve been craving for days. But are you sure you know the ins and outs of your overdraft terms?
According to our research, that extra £50 you spent taking your current account into overdraft could actually be costing you a whole lot more than you think.
How much interest are Brits being charged?
Alarmingly, two thirds of Brits (68%) don’t know how much interest they’re being charged on their overdraft, potentially trapping them into a vicious cycle of borrowing.
The number of Brits going into overdraft
One in four Brits (25%) admit to going into overdraft over the past 12 months, according to a study of 2,000 Brits commissioned by finder.com and conducted by OnePoll in June 2018. That totals to almost 8.9 million people potentially being hit by fees they aren’t aware of and/or don’t understand.
An additional 750,000 consumers aren’t even sure whether they’re going into the red or not.
Women take the lead when it comes to dipping into the red, with just over 1 in 4 (26%) doing so in the past 12 months. Men weren’t far behind, however, coming in at 25%.
Perhaps unsurprisingly, people aged between 18 and 34 were much more likely to dip into the red. Two in five (40%) did so at some point last year, which was more than three times the figure for those aged 55 and over (13%). Those aged between 35 and 54 sat in the middle at just over 1 in 4 (28%).
|Region||% that have gone into their overdraft in the past 12 months|
|Yorkshire and the Humber||29%|
How much are Brits borrowing?
“Banks are now required to text you or send a notification if you’re about to go into the red, so make sure you keep an eye out for this and don’t ignore it. If going overdrawn is unavoidable, make sure you’ve checked the fees involved so you know exactly how much it will cost you, and try to organise an arranged overdraft beforehand as the fees are lower than with an unarranged one. Crucially, it makes sense to pay off the debt as soon as you can, as even being overdrawn by a tiny amount can see you being charged high fees every day.”
– Jon Ostler, UK CEO at finder.com
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