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Research from moneysupermarket.com has found that 10% of British adults – five million people – are permanently in their overdraft as they continue to struggle with their adverse finances.

If you are in your overdraft more often than not it is time to take stock. An overdraft is not a right, it should be just warning sign to tell you that your finances are stretched too far and you are living beyond your means. An overdraft is an alarm bell to get some professional advice.

Kevin Mountford, head of banking at moneysupermarket.com, says: "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."

It doesn't make financial sense to live in the red – the website says that someone with an overdraft of £500 could be paying more than £240 a year more that they should for the privilege. Mountford adds: " The dangers of being overly, or entirely, reliant on your overdraft are clear; firstly 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."

The only way to drag yourself out of debt is to take charge of your finances – look at where your money is going and look where you can plug the gaps. Some changes may be easy, like spending less on luxuries, but others like mortgage repayments may not be so easy to reduce. Talk to a professional adviser about making meaningful changes to your finances so as to be able to live in the black, not the red.

SOURCE: Moneysupermarket.com, 24/02/10

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