Two in three don’t understand overdraft fees as borrowing hits £9.4bn

04 Jul 2018 Two thirds (68%) of those with an overdraft have no idea how much it’s costing them, according to research by personal finance comparison website finder.com.

And with a quarter of Brits going into their overdraft during the past 12 months, this means almost 8.9 million people are potentially being hit by fees they aren’t aware of or don’t understand. An additional 725,000 consumers aren’t even sure whether they have gone into the red or not.

The average amount people borrowed from their overdraft last year was £721, putting Britain’s overdraft debt at more than £9.4 billion over the past 12 months. While a similar number of men and women take out overdrafts,  men are the biggest borrowers, spending £166 more on average than women in the past year (£808 vs £642).

Regionally, Scotland and London have the highest proportion of people dipping into their overdraft, as almost a third of residents were overdrawn (31% and 30% respectively) last year. This was closely followed by Yorkshire and the Humber (29%), while the lowest proportion of people going overdrawn was in East Anglia (18 percent).

Region

 % that have gone into their overdraft over the past 12 months

East Anglia

18%

East Midlands

24%

London

30%

North East

21%

North West

27%

Northern Ireland

26%

Scotland

31%

South East

22%

South West

23%

Wales

20%

West Midlands

27%

Yorkshire and the Humber

29%

Perhaps unsurprisingly, people aged between 18 and 34 are much more likely to borrow from their overdraft. Two in five (40 percent) did so at some point last year, more than three times the figure for those aged 55 and over (13 percent). Younger people are also likely to borrow more than their older counterparts at an average of £863.70 each, compared to £485.45.

To view the full results of the research, complete with an interactive map of the number of overdrafts per region, please visit:https://www.finder.com/uk/overdraft-fees

Commenting on the findings, Jon Ostler, UK CEO at finder.com, said: ‘‘Although the Financial Conduct Authority is looking to regulate overdraft fees and enforce greater transparency, it is very concerning to see many consumers continue to pay fees unwittingly. Daily charges for unarranged overdrafts are typically between £5 and £8 so, with additional interest and monthly charges on top, it can add up quickly.

When considering borrowing money it’s worth looking at all your options. Banks are now required to send a notification if you’re about to go into the red, however many still come with excessive fees and can rack up debt easily. If borrowing money is unavoidable, consider taking out a personal loan from friends or family, or a zero percent credit card so you know exactly how much you owe at any given time. As with any debt, it is important to set yourself a budget and plan to pay it off in order to avoid accumulating more fees.”

 

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