Will your overdraft see you through to January pay day?

Andrew Hagger of Moneynet.co.uk warns consumers that slipping into unauthorised overdraft could see their New Year get off to a bad start.

With Christmas well and truly behind us, the cold reality of a depleted bank balance will make for bleak reading for some people who may struggle to avoid exceeding their limit before January pay day finally arrives.

A number of people will have been paid early over Christmas which may have seemed like a good idea at the time, but having to make your salary last that extra week will prove a struggle for those who overspent in December or got carried away in the New Year sales.

If you don't have an agreed overdraft or you think you could do with a little more financial breathing space, contact you bank or building society and arrange an authorised overdraft to tide you over.

The cost of an authorised overdraft is a mere fraction of the cost of unauthorised borrowing, and a arranging a temporary increase for a couple of months whilst you get your finances back on track could save you from some crippling bank charges which could turn a minor problem into something more serious.

To highlight the importance of staying within your agreed limit, the table below shows how much it will cost you if your bank agrees to pay two £75 cheques presented on the same day that take you £150 over your limit and then your account remains overdrawn by this amount for 7 days until your January salary is received.

The problem with unauthorised overdraft charges is that there's no common policy - some providers charge daily, some charge monthly, some do both and the level of charges varies widely.