Experts say costs can quickly build up if people aren’t paying attention to their bank balance

Experts are urging Brits to keep a close eye on their bank balances to ensure they are not building up overdraft charges.

Millions of people with the big banks regularly use overdrafts and while some may have agreements with their banks, others may not.

Some may also go over the limit they are allowed or accumulate interest payments because they haven’t paid it back in time.

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And with banks like Santander and HSBC charging overdraft rates of almost 40%, interest costs can quickly add up.

TotallyMoney estimates that 9.7 million adults are overdrawn and by an average of £709.

Being overdrawn by the average balance of £709, with a typical APR of 39.90% would cost £283 in interest each year.

Experts warn many people are so used to overdrafts they go into regularly, sometimes every month, and may not be aware of charges on their bank statement or changes to interest rates which could affect repayments.

Alastair Douglas, CEO of TotallyMoney, said: “For some, overdrafts are a ghost debt.

“Customers often treat as an extension of their current account, there’s no separate card, bank, or app – and the interest charges can get lost among their account transactions.

“Some might have forgotten they ever applied for their overdraft, while others won’t be aware of the interest rates being charged.

“It’s important to remember that an overdraft is debt – in the same way that a credit card, loan, or buy now pay later agreement is.

“And this is especially true if it feels like you’re spending most of the month sitting in the red.

“That’s because overdrafts are often one of the most expensive ways to borrow, with cheaper options often available.

“If you have savings, then consider using the money to clear your balance.

“By not paying interest to the bank, you should be able to save more in the long run.

“You could also shop around for a bank who offers an interest-free overdraft – just remember that you’ll need to pass a credit check first, so check your report first to make sure everything is correct and up to date.”