CCCS highlights overdraft concerns as rates rise

08/06/2009

People could have a debt problem without even knowing it, a report out today suggested.

The Consumer Credit Counselling Service (CCCS) said that it was likely that people had "fairly serious" money worries if they used their overdraft each month to help them make essential costs such as grocery shopping and their utility bills.

In the report, the fact that using an overdraft was a form of credit was also highlighted.

The CCCS analysis followed the release of figures from Moneysupermarket.com last week, which showed that overdraft interest rates have been steadily increasing over recent months.

Multiple products currently on the market are charging annual rates of well over ten per cent - meaning that customers who are in their overdrafts a lot can quickly stack up debts.

Tom Howard, spokesperson for CCCS, said: "Overdrafts exist to give consumers that little extra leeway in their finances, for instance if you accidentally forget to cover the funds for a direct debit or something similar, and also give a cushion to fall back on in times of need.

Kevin Still, EuroDebt director, added: "We have identified that rising overdraft costs and high bank charges can be a contributing factor to people getting into an unmanageable debt position, where priority payments like your mortgage, rent or council tax may be put at risk depending on when your overdraft facility is exceeded.

"Switching the salary or wages to a new basic bank account is often the first priority when a client enters a Debt Management Plan to avoid money being 'offset' to pay off other debts within a banking group."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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