14th July '08 - Overdraft Rates Lead to Debt Management Plan Speculations
There are fears that the number of UK citizens seeking to take out a debt management plan is set to grow. These worries come in the wake of news that an increasing number of current account holders are moving into the upper limits of their overdrafts.
Such debt management plan fears have been augmented by recently released Bank of England figures detailing how the average current account overdraft interest rate has risen from 17.4% to 17.9%.
Although it is difficult to ascertain just how many people are currently surviving in their overdrafts, many financial experts are concerned that the problem could be reaching an unmanageable level.
Moneysupermarket’s Tim Ross comments, “The number of personal loans has fallen dramatically due to the tougher lending criteria from banks, so to still see such a rise in personal debt implies that people are using their overdrafts as a way to cope with everyday living costs.”
Long-term, using an overdraft to pay for basic expenses is rarely sustainable, and for many of these consumers it may only be a matter of time before they consider a debt management plan.
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