A quarter of account holders who use the account facility believe December is when they’re most likely to dip into those funds.
January is the second most likely month for overdraft activity, with a fifth (19%) of account holders spending while their account is below zero, Nationwide’s study reveals.
The average amount borrowed by overdraft users is £178 each time and those who dip into the agreed funds lent from the bank usually spend around 12 days per month in their overdraft.
Spending too much during Christmas was the main reason according to over a third of (34%) of 2,000 account holders surveyed by the mutual.
Following splashing out over the festive season were household bills being more expensive than usual and having a salary which didn’t keep up with rising bill costs, which both influenced around a third of account holders (34% and 31% respectively).
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A quarter (24%) also dipped into their overdraft due to an unexpected expense cropping up during the month.
Meanwhile, UK current account holders spend an average of £1.4bn on high-interest overdraft charges each year.
On average, a fifth of account holders have to pay £278 due to their overdrawn usage.
Marta Edwards, head of current accounts at Nationwide Building Society, said: “The festive period brings lots of extra expense and the January payday can often feel like it is taking an age to arrive. An overdraft can provide a safety net for consumers helping them bridge the gap until payday arrives.
“Our new buffer will be welcome news for all overdraft users, with those borrowing £50 or less not paying any charges. For those borrowing more, they will benefit from paying less interest. Most people use an overdraft occasionally, but if you are worried about your reliance on it then get in touch with your bank or building society as they will have a range of support available.”
Here are four tips from the mutual on how to stop dipping into your overdraft:
1. Regularly monitor your account: a fifth (20%) of people said they went into their overdraft because they didn’t keep an eye on their spending. A bank or building societies Banking App will allow you to access your account from your phone.
2. Consider having separate accounts for bills and non-essential spending: work out how much discretionary money you have left at the end of each month and consider putting this in a separate account to make it easier to budget.
3. Set up text alerts: An alert can be set up on your accounts to receive a text when you have dipped into their overdraft. This can prompt you to take action and move money from elsewhere to avoid overdraft charges.
4. Get into the savings habit: By steadily building up a pot of money, you have something you can dip into to cover unexpected bills or cover the costs of Christmas. Consider a review of your bills – if you haven’t switched savings account in a while, you may be able to get a better deal and the money saved could be used to start building up a nest egg.
