It has been suggested in a recent report that many consumers in the UK that have overdraft facilities that they use regularly could be better off switching their overdraft debt to a personal loan.
These days, in the current economic and financial climate, many people have not only had to dip into their overdraft facilities but have been using them on a regular basis, leaving their bank accounts in the red each month and causing them to have to pay monthly interest charges. On top of this being overdrawn to the hilt means that consumers are more likely to face overdraft charges in the event that an unexpected payment comes out.
Consumers are now being advised to switch their overdraft debts to a personal loan if they have become so reliant on their overdrafts that they are always in the red. According to a report more and more people have become reliant on their overdrafts, and this means that they are always in the red. One industry official said that for some of these people switching to a personal loan could be a far more effective solution, as it could work out far cheaper in the long run in terms of interest.
Industry expert Gavin Littlejohn said that it was important for those in this situation to manage their budgets more effectively so that they could realistically afford repayments and interest. He said: “If you’re [permanently overdrawn], consider converting your overdraft (and any other debts you have) into a personal loan, as the interest is likely to be considerably lower.”
He added: “For example, if you need £5,000 to pay off your credit card and overdraft, you can pay interest of as little as 8.8 per cent APR over three years, with a total repayment of £5,679.”
Source - QCK