Underpaid, overdrawn and compulsively extravagant

How many times have you been overdrawn since becoming a student? Never? Once by accident? Twice maybe? Perhaps you’re still overdrawn? If you are, you’re not alone.

Recent research from price comparison website Moneysupermarket.com has found that over a third of bank customers used their overdraft facility at some point in the last year. It also found that an astounding five million adults are permanently overdrawn here in the UK—fewer people than the previous year, but still a major worry.

The odds are stacked against you if you’re in debt right now. The average monthly interest rate on overdrafts is at a high of almost 19%, average credit card rates are only marginally better at 16.4% and with inflation rising, there’s only one way interest rates are going to go next—and that's up.

However, there are a few simple steps you can take to ensure that you get back to black and stay there. Firstly, ensure that you budget properly—work out what you can afford to spend each month after all your regular outgoings and stick to the plan. Easier said than done? Don’t have time? Now we’re all online, it’s quicker and simpler than ever before to get to grips with your finances, so no excuses.

It sounds obvious but don’t just forget about your budget after you’ve set it. If you use a credit card, try your best to avoid running up a bill that you can’t pay off each month. If you fail in this mission, revise your budget, tighten your belt and at least cover the minimum payments so you don’t have penalties on top of the interest. You should also make sure you know exactly how the charges on all your accounts and credit cards operate so that you don’t get caught out.

If you have money worries it’s no use burying your head in the sand. Check your balances regularly and know when standing orders and direct debits leave your account and set reminders to make sure that you aren’t taken unaware by a payment. Online personal finance tools such as Money Dashboard are a helpful way to take the hassle out of tracking your spending and will offer an email reminder service. Nobody likes paying bills but you can cut down on the anxiety by being proactive and settling them on time.

It’s also worth remembering that you can often find a better deal on your credit card. For example, you might be able to transfer your credit card balance to a new card and pay no interest on the debt for 6-12 months, giving you a chance to clear the balance by the time the 0% interest period expires. You will have to pay a 2-3% transfer fee, which can be added to your balance, but it’s usually worth it.

Finally, control your spending. If you’ve blown your budget, review your spending pattern and set priorities. Work out what is important to you, see where you feel you’ve wasted money, then set a budget that is achievable.

If you still find that you’re struggling, seek advice before bills and debts get out of control. EUSE, the Citizen’s Advice Bureau, the Student Loan Authority and even your bank may all be able to help.