Five million current account holders are permanently overdrawn, as one in ten Brits live in their overdraft, moneysupermarket.com has revealed.
Despite a significant number of Brits living in the red, the figures represent an improvement on 2008's findings when 52 per cent of people dipped into their overdraft compared 38 per cent last year.
Encouragingly, the number of current account holders permanently overdrawn has also fallen in the past year from 17 per cent in 2008 to 10 per cent in 2009.
Commenting, Kevin Mountford, head of banking at moneysupermarket.com said: "Whilst it is encouraging to see less and less people reliant on their overdrafts, we should be concerned that there are still such a large number of people permanently overdrawn.
"With rising inflation, it is going to be difficult for many to break the habit of living in the red, and it may be that more people will fall back into this position as living costs increase."
According to the price comparison website, current account holders with an overdraft of £500 could potentially save up to £240 a year by switching to the right account.
Analysis by moneysupermarket.com has found that the Halifax Reward Current Account could benefit people who go overdrawn less than five days a month. The overdraft charge for the account stands at £1 per day for balances under £2,500, but account holders receive £5 monthly credit from Halifax which would cover the cost of the charges.
For current account holders that are constantly in the red, the price comparison website suggests the Alliance & Leicester Premier Direct Current Account as it has the lowest annual charge of £60.
Warning consumers about be overly or entirely reliant on their overdraft, Mr Mountford said: "This can be an extremely expensive debt to carry if it hasn't been agreed with your bank in advance, and secondly your bank can reduce the size of your overdraft with little warning.
"Consumers should always consider the ways in which they use their current account, and make sure they have the right product to match."
© Fair Investment Company Ltd
