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Bank charges soar as millions enter overdraft early in the month

Millions of Brits are clocking up bank charges on overdrafts as soon as they get paid, according to new figures showing many are in the red on the first of each month.

A survey from budgeting account provider thinkmoney shows that 11.1 per cent of overdraft users, equivalent to 1.9 million people, slip into negative territory on the first of the month. 

Overall, 17 million people with a current account (36 per cent) make use of an overdraft and by the 16th of the month over half of them are overdrawn.

The study also reveals how behaviour changes as the month progresses and the money runs low. Straight after payday there is a rush to the supermarket, with 32 per cent, or 16 million, doing a large and indulgent grocery shop. 

But splashing out like this just after payday seems to leave people a bit strapped for cash as the month draws on, the firm notes.

Some 20 million people (42 per cent) put off any non-essential spending, while 13 million (26 per cent) live off the food they already have in their cupboards.

Ian Williams from thinkmoney said: "It seems that the excitement of being paid can cause people to dash out and spend, only to run low on funds later in the month - with more than a third of us using an overdraft to get by."

Samantha Clarke

Samantha is a former banking assistant and has over ten years experience in retail bankingADNFCR-2776-ID-801598378-ADNFCR

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