Festive overspending makes December and January the peak months for overdraft usage, according to Nationwide.
25% of people who use their overdraft say December is the month they are most likely to go into their overdraft more or earlier than usual, closely followed by January at 19%.
However, Nationwide is softening the blow from 13 November.
New and existing current account customers will benefit from a £50 interest-free overdraft buffer.
House prices have seen the fastest pace of annual growth since December, with prices up 2.4% year-on-year in August. The average house price now stands at £265,375.
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It will apply to new and existing overdrafts on all the Society’s three main current accounts - FlexPlus, FlexDirect and FlexAccount. This change reduces the representative APR to 38.2 per cent, down from 39.9 per cent.
With the introduction of the buffer, around a quarter of Nationwide’s overdraft users won’t pay any interest, while all overdraft users will see a benefit as those who borrow more will now pay a little less in interest charges.
Overspending at Christmas
According to the research, people who regularly, or always, dip into their overdraft spend an average of 12 days per month overdrawn, borrowing an average of £178 each time.
The top reasons for going into an overdraft include spending too much at Christmas (34%), household bills being higher than normal (31%), income not keeping up with rising bills (29%) and an unexpected expense (24%).
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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.
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"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.”
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