The past three months has seen 22% of bank account holders charged for entering an unauthorised overdraft – showcasing the need for good financial management.

An authorised overdraft is there to act as a safety net in instances where not enough money is in an account to cover a payment or cash withdrawal.

However, people are exceeding these limits or do not have one entirely, meaning they are charged for going overdrawn.

Research from showed that more than a fifth of people had faced charges since July for such an occurrence.

Facing avoidable bank charges

More than half had paid sums of £20 or less in charges, but 11% revealed they paid more than £50 – all charges that could be avoided.

For anyone struggling with their finances, these charges can make the situation even more difficult, suggesting that managing funds in a different way might be required.

Past research suggested that nearly 30% of people paid bank charges in 2013, with more than half of those people saying it pushed them into an unauthorised overdraft as a result.

This could even lead to further charges, making it more difficult for people to get a firm grip on their finances.

People aged between 25 and 34 were most likely to be charged for unauthorised overdraft usage in the last three months, with nearly 40% of this age group doing so.

An emphasis on careful budgeting when managing mortgage costs, family bills and other outlays is required, unless costs should spiral out of control.

Knowing when certain bills or payments are leaving an account is an essential part of planning spending – especially if funds are particularly limited one month.

Considering prepaid options

A prepaid card is a great way of managing money as only funds on a card can be spent – going overdrawn is not possible and as a result neither is building up debt.

The cards can also be topped up if more funds are required for a certain purchase, so it’s possible to keep a close eye on what is being spent.

The cards can easily be replaced if required, while accounts can be checked regularly online if needed.

Unlike credit and debit cards, prepaid cards are not directly linked to a bank account, making fraudulent activity a lot more difficult as well.

This is essential in a world where levels of cyber crime are increasing and the threat of fraud is high.