Debt management advice: 'Avoid' unauthorised overdraft debts

12/01/2010

Consumers risk adding to Christmas debt with unauthorised overdrafts, an industry expert has warned.

People struggling to make their December pay cheque last through the January sales would do well to take out an agreed overdraft extension and avoid hefty charges, said Andrew Hagger of Moneynet.co.uk.

Mr Hagger warned: "The problem with unauthorised overdraft charges is that there's no common policy - some providers charge daily, some charge monthly, some do both and the level of charges varies widely."

To avoid further debt from these charges, he suggested talking to your bank and agreeing to pay a set rate in order to extend your overdraft.

He advised reducing the size of the overdraft once your finances have recovered from Christmas.

Unauthorised overdraft fees on a theoretical excess of £150 over one week can total anything between £25 and £155.

The director of EuroDebt Kevin Still commented: "One of the reasons that EuroDebt launched its Prepaid Current Account at www.bankswitching.co.uk was to provide indebted consumers with a bank account with transparent fees and no penalties for bounced direct debits or standing orders.

"The account is available to people on a Debt Management Plan (DMP), Individual Voluntary Arrangement (IVA) or an undischarged bankrupt."

Tags; Debt Management and Banking,

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