Two million people permanently in red

By Jennifer Hill

LONDON (Reuters) - More than two million people are permanently overdrawn, and the average worker goes into the red 27 days after payday, a survey shows.

Almost half of working Britons -- more than 10 million people -- have slipped into the red at least once in the past 12 months, including 2.1 million people who are continually overdrawn, according to price comparison site Moneysupermarket.com.

Those who are unable to stay in the black go overdrawn on the 20th of the month, on average -- 27 days after payday, as most people are paid on the 24th day of the month.

Kevin Mountford, head of current accounts at Moneysupermarket.com, said the findings were not surprising, particularly as the Bank of England has hiked the base rate five times in the past year.

"Consumers are no doubt feeling the squeeze," he said.

He urged them to beware of overdraft interest rates: some can be "punitive", he said, so some people might be better off using a 0 percent interest credit card to tide them over until payday.

"Not only this, but your overdraft can be a murky place to reside, especially if you are close to the edge of the authorized limit," added Mountford.

"Unauthorized rates are often much higher and there are sharp penalty fees for breaching your agreement."

Nearly half of those surveyed said they cut back on spending or curbed their lifestyle as their cash started to run out and one in 10 dipped into their savings.

YouGov interviewed a sample of 2,116 people for the poll.

 

This was found at Reuters.

Technorati Tags: Business, International, Sad, Scary