One in 10 homeowners and renters admitted to being caught short when they needed to pay their housing costs but had run out of money, equivalent to 1.2 million people.
Of these, one fifth used their overdraft to cover the full payment amount, while a quarter used it to cover, on average, half of the cost.
Rising at their fastest pace for three years, the average rent now stands at £886. The average mortgage payment is £680 per month.
Overall, a third of adults have to use their overdraft to make ends meet because they have run out of money before the end of the month.
From 6 April 2020, new FCA rules mean daily and monthly charges will be scrapped and banks must charge a simple annual interest rate for overdrafts, without additional fees and charges. This move is designed to make overdrafts simpler, fairer, easier to manage and easier to compare between current account providers.
However, a number of high street banks have announced a flat fee of 39.9 per cent on all overdraft fees. Lloyds and challenger banks Starling and Monzo have announced a different percentage, which will be tied to customer credit scores.
According to the survey, over a third of individuals believe that the flat rate of 39.9 per cent will end up costing them more money.
John Crossley, head of money at comparethemarket.com said: “During the course of life we will all have rainy day moments when we’ll need to use emergency funds. On these occasions, people need pots of money to dip into – a savings nest egg. Relying on overdrafts to fund regular bills, including mortgage or rental payments, can be a costly way of managing household finances.
“With the rise in overdraft fees, there are other solutions available to pay off debt in a responsible way. Borrowers should ensure they only borrow what they can repay and use a soft eligibility checker to prevent damaging their credit score. Anybody struggling to make repayments should contact their provider in the first instance.”
