According to Cahoot's 'Lifestyle Index' report, more than half of the UK's population are spending more than they earn.
The internet bank's findings showed that 51 per cent of people would overspend their earnings in some months and eight per cent of respondents are overspending every month, confirming analysts' fears that "bad debt" is becoming a serious problem.
Credit cards (49 per cent) and overdrafts (48 per cent) are the most common forms of debt, the figures suggesting people are more inclined to borrow money to finance their monthly expenses with only 38 per cent saying they would use savings.
Joe Wiggins, a spokesperson for Cahoot, said: "We live in a culture where people are more prepared to buy what they want, when they want and pay for it later."
The majority of people's disposable income is spent on "non-essential items", such as restaurants, clothes and magazines, he explained, so for most cutting back is fairly easy and debt in itself not an inexorable problem.
"Debt is not necessarily bad, but bad debt is bad," Mr Wiggins concluded.
Cahoot currently offers an automatic interest-free overdraft of £100 to current account holders, as well as a text alert service to customers when overdraft limits are reached or debits over the pre-agree amount are made.
Further research from the bank suggests that these 'constant contact' services are welcomed by consumers. Forty-one per cent of those asked replied that they would find it 'helpful' if their bank could use a similar system to help them stay in touch with their spending. >To read more information on banking and current accounts, click here.
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