Millions 'in the red every month'
Published On 21 July 2007
Millions of people from the UK could need things like IVAs in the future because they are unable to avoid going overdrawn, new research suggests.Price comparison site moneysupermarket.com found that over ten million working people in the UK went into the red at some point in the last 12 months. Of these, 2.1 million people face serious debt problems as they are permanently overdrawn.
"It's no surprise so many people are permanently in the red - with interest rates having risen five times in the past year consumers are no doubt feeling the squeeze," explained Kevin Mountford, head of current accounts at moneysupermarket.com.
"Your overdraft can be a murky place to reside - especially if you are close to the edge of the authorised limit.
"Unauthorised rates are often much higher and there are sharp penalty fees for breaching your agreement."
However, the research also revealed a sharp age divide in terms of who used their overdraft the most.
Around two-thirds (64 per cent) of workers aged over 55 manage to remain in credit at all times, compared to just 40 per cent of people aged between 18 and 25.
Research by the Personal Finance Education Group found that a considerable number of teenagers believe that an overdraft can be used to purchase things out of their financial reach.
