What traditionally was considered a facility to cover yourself for the unintentional ‘slip-up’ towards the end of the month (when your wages had run out!) is increasingly becoming a necessity, new research commissioned by Money Supermarket has claimed.
According to the internet company, being overdrawn is now a permanent fixture for 10% of UK adults and this figure increases to 16% in the 20-29 age category.
It is this youngest age group which caused researchers most concern as almost half this age-group had fallen into the red in the last year requiring debt advice UK. When this is combined with the poor savings habits of the young it makes for grim reading.
Unsurprisingly it is the ‘grey’ bank account holders that seem to manage their money best, with only 18% of those aged 70+ using their overdraft at all during the past 12 months!
So is this increasing use of the overdraft facility a worrying trend, slack financial management, or simply a reflection on the extraordinarily tough economic conditions that preside in the UK at the start of 2011?
- This blog writer is of the opinion that a combination of all is to blame.
The hidden mystery and respect for the local bank manager has dissipated over the past 20 years, to the point where they are now little more than sales managers. The banks would have you believe that all staff are ‘customer service representatives’, but make no mistake, the smiling friendly face in your local branch has sales targets tattooed on their brain! This culture means that when you go into the bank, the banks staff actively try to sell you an overdraft, instead of pointing you to the virtues of impeccable fiscal restraint and planning. When this is coupled with the fact that having an overdraft (or at least applying for one) is tagged on to the account opening process – in the same way that having a debit card is – it is hardly surprising that the trend for having overdrafts in the first instance is increasing. And of course, once you have one… its easy to spend!
Next on the ‘blame’ list is the slack financial management that pervades the UK.
- But where has this come from?
- Were we always this bad?
Internet research suggests not and indeed if you ask any person of pensionable age and they are likely to blame the ‘I want it and I want it now!’ age. Re-wind back to the 1960s and it was normal to save hard before finally making a purchase. But that wasn’t all… the modern age is said to have become a time when an incredible variety of gadgets, cars, items, jewellery, clothes and indeed furniture are said to be ‘needed’.
Whereas our relatives who saved in the 60’s and before were saving to buy one item, rather than several! Add in the fact that very few households truly understand their monthly outgoings and Houston, we have a problem.
The tough economic conditions are the final leg of this increasing tendency to use the overdraft. It has been well documented that food price inflation, energy bill increases and the sky-high cost of petrol are hitting ‘Alarm Clock Britain’ hard. As this creates an increasing squeeze on household budgets, the inevitable consequence is to dip into the overdraft. However, this type of overdraft usage isn’t the occasional slip-up… it’s the use of a credit facility to fund every day living.
If you find you are in this position and are living in your overdraft each and every month, then you might want to consider a financial health check from Lewis Alexander.
By calling us FREE from land lines using 0800 018 6868, our trained debt management consultants can help review your financial position and can offer options to help you get out of debt. It is rare for UK adults to only have one line of credit – an overdraft – and because of this we have a wide range of experience in helping clients with a variety of personal debt problems, from struggling with a small loan, through to those with on the verge of bankruptcy.
- Call today using 0800 018 6868 to see if we can help you!
