There has been a marked increase in the level of borrowing among high-rate taxpayers over the past three years, with many citing the rising cost of living as the main cause.
A third of high-income families are now reliant on ongoing overdrafts of over £1,000 to keep the family finances ticking over between pay days, compared with 15 per cent in 2008, according to credit reference agency Experian. The report reveals a high proportion of these families (52 per cent) are regularly borrowing money against their overdrafts resulting in expensive interest payments. Despite this, nearly two-thirds of high-income families are optimistic about their financial future, with 61 per cent believing their situation will improve in the next 12 months.
"UK families often rely on their overdraft to get by, but that is not always the best option. Many of us choose to borrow, but it's where you borrow from that makes all the difference," said Peter Turner, managing director at Experian Interactive. Interest rates on new mortgages, credit cards and loans have been falling in recent months despite the crisis in the eurozone and concerns over the European banking system.