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Overdraft overuse

A three-year survey from Experian has revealed that 52 percent of high-income families regularly borrow money using overdrafts, resulting in higher repayments, as interest rates on overdrafts tend to be higher than on other credit products.

The study, by information services company Experian, reveals that families often opt to use an overdraft above securing a personal loan, which can often be a cheaper way of borrowing.

Peter Turner, the managing director of Experian Interactive, said: 'Families often rely on their overdraft to get by, but that is not always the best option. Many of us choose to borrow, but it’s where you borrow from that makes all the difference.'

It is important when you are looking to borrow that you bear in mind what the best rates are as well as managing your own credit history. Peter Turner advises that we learn to manage our credit reports properly: 'The current financial climate is tougher than ever and seeing your credit report could help families manage their credit better, as well as helping them plan for their financial futures.'

He also recommends that when you look for the best rate you keep your credit history in mind. If there are multiple requests made to see your credit history in a short time, it can look as though you are stretching yourself or a fraud is being committed. Despite the increase in borrowing, Experian found that 61 percent of high-income families are optimistic about the future, believing that their financial situation will improve during the next twelve months.

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