Overdraft Woes ‘Causing Huge Problems for Indebted Brits’
October 12, 2016
Overreliance on bank account overdrafts is an increasingly significant source of financial difficulty for many thousands of UK consumers and people with problem debts.
That’s according to the debt help charity StepChange, which has published figures suggesting that there are as many as 1.7 million Brits who can now be described as being “trapped in an overdraft cycle”.
StepChange’s data is based on polls among people who have contacted its services for help with their debt problems, with a majority of respondents indicating that they have an overdraft banking facility.
Of those who said they have one or more overdraft, the typical usage pattern was to go overdrawn as often as in 11 of the past 12 months.
Many people were found to have well in excess of £1,000 in overdraft debt outstanding, in addition to a variety of other unsecured debts.
Part of the problem for people who are dealing with high levels of debt and still using an overdraft facility is that they can easily find themselves going over their agreed overdraft limit and incurring fees in the process.
These fees are often in the region of £45 for each instance of exceeding an overdraft limit, which for many indebted Brits means adding several hundred pounds every year to their overall outgoings.
“Overdrafts are the second most common type of debt we see and many of our clients, who are already in real financial difficulty, have been hit with penalty charges averaging £225 per year,” explained Mike O’Connor, StepChange chief executive.
“Financially vulnerable people need help rather than being pushed further into trouble each month. It is time for the FCA [the Financial Conduct Authority] to intervene, as they did with payday loans, to set a cap on the amount banks can charge for unarranged overdrafts.”
Earlier this year, StepChange reported that more people than ever before have been reaching out for its support in dealing with their debt management problems.
If you live in Scotland and you’re finding it tough to cope with your personal financial pressures then Scotland Debt Solutions may be able to help. You can contact any of our offices today to arrange a free and confidential consultation.