Regularly having to go into an overdraft, or over an overdraft limit, and being hit by unarranged overdraft charges can lead to and exacerbate financial difficulties for many financially vulnerable households.
Overdrafts are a significant part of the debt landscape
More than half of our clients have overdraft debt. Our research also found:
- Overdrafts are the second most common debt type we see (after credit cards) –52.8% of our clients have overdraft debt.
- We helped nearly 100,000 people with overdraft debt in the first half of 2016.
- The average overdraft debt among these clients is £1,679
What needs to be done about overdraft debt?
The Financial Conduct Authority (FCA) need to take action to tackle the role of overdrafts in problem debt:
- There is a clear need for an unarranged overdraft charge cap to be set by the FCA.
- The FCA needs to undertake a review of persistent overdraft debt and do more to tackle the detriment caused by this.