Overdraft Levels Increasing
The number of people who are turning to overdrafts as a solution to their financial needs is on the increase, according to a recent report.
Since the onset of the global credit crunch last year, many banks and other financial institutions are being forced to restrict the level of lending they are prepared to provide to individuals on loans and credit cards and as interest rates on these products are still increasing, many people are choosing the option of an overdraft facility on their bank current account.
As the slow down in the UK economy continues, this also has a knock on effect within other businesses, outside the financial sector and individuals may well find themselves earning less than they did previously due to a decrease in the level of overtime, bonuses, or commissions they receive from their jobs. Coupled with this is the fact that the cost of living is rising disproportionately to earnings, with increased bills on items such as food, energy, council tax and petrol.
There has been a sudden increase in the level of individual’s overdrafts in the past couple of months and this is likely to continue for some time, as many people assume they will not be accepted for a loan or credit card, or do not want to commit to an additional regular monthly payment.
Although overdrafts are certainly an expensive method of borrowing money, and a personal loan will usually work out considerably cheaper, particularly over the long term, the increased use of overdrafts is likely to continue and they are still cheaper than opting for doorstep collection loans.
