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Overdraft debt `becoming more expensive`

18/05/2010

The average interest rate on authorised overdraft debt is higher than it has been for ten years, according to research by Moneyfacts.

Overdraft rates have been on an upward trend since 2004, and this month the average rate stands at 14.22%. The last time it was higher than this was in 2000 - in May that year, the average overdraft rate stood at 14.78%.

Moneyfacts` research found that even though the base rate has remained unchanged for the last 14 months, bank account providers have continued to raise overdraft rates by as much as 3.4%.

An expert at Debt Advisers Direct commented: "Overdrafts can be a very convenient way of borrowing in the short term, but because of the interest rate they`re often not so appropriate for people thinking of repaying the debt over a longer period of time.

"As such, people should think carefully about their borrowing. If they intend on repaying the debt in the next few months, an overdraft may be a sensible option, but for more expensive purchases that will take longer to repay, a personal loan might be more appropriate."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according