Difficulties in getting loans result in increase of overdraft popularity - May 15, 2008
Since the onset of the global credit crunch in summer last year getting any sort of finance and credit has become increasingly difficult. Consumers have suffered when it comes to mortgages, credit cards, loans, and even car finance in some cases, and this has resulted in many suffering real financial woes. With lenders having tightened their lending criteria considerably over the past few months consumers are finding it more difficult and more expensive to get their hands on the finance that they need.However, with many households also having to try and cope with rising living costs and bills, such as food, petrol, energy, water, and various other bills, many are in desperate need of credit. According to a recent report many may be getting this by relying more on their current account overdraft facilities, as there appears to have been a sharp rise in
overdraft use over the past couple of months.
According to the recent data borrowers owed around £10.2 billion in overdrafts last May. However, by February this amount had fallen by around one billion pounds. The report claims that in March of this year there was a sudden rise in overdraft use, with the figure going up by £217 million in the space of just one month, indicating that many more
people were turning to their overdrafts in order to fund their living costs.
However, consumers are urged to remember that the cost of using an overdraft can be high, and exceeding the limit can still result in costly fees whilst the court case into charges continues. Consumers opinions regarding overdraft use appears to be split, with some stating that consumers should live within their means, and other stating that it is
understandable that people have turned to overdrafts given the rise in living costs over recent months.
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