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 to help us borrow money in the short term. Overdrafts can sometimes be attached to hefty hidden fees and charges, but with new regulations the rules of the market are changing. Read on to find out more about the overdraft industry in the UK.

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, one in four 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? Five 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 are using 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 are 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.

Click here for more research. For all media enquiries, please contact:

Matt Mckenna
UK communications manager
T: +44 20 8191 8806