An overdraft lets you carry on spending, even after your balance reaches zero.

This means that when you withdraw cash, buy something, or pay bills, you're borrowing money from the bank. That's why it's sometimes known as an overdraft loan.

How does a bank overdraft work?

Most bank accounts come with an overdraft facility.

If you had an overdraft account but no money left in it, and then you spent £5, you'd have a negative balance of -£5. It's called being overdrawn.

You pay the money back later, when you top up your bank account with your salary or by depositing money.

Sometimes, overdraft charges are added on for using your bank overdraft.

Use the comparison table above to find a bank account with overdraft facility online.

How to find the best current account with an overdraft

When searching for the best current account with an overdraft, you need to look at and compare:

  • Overdraft limit: This is the maximum you can borrow.

  • Interest rate: This is charged by the bank on the amount of money you've borrowed through your overdraft. The higher overdraft interest rate, the more interest you'll have to pay.

  • Overdraft charges: With some banks, overdraft fees are charged as well as (or instead of) interest. You usually pay the overdraft fee annually, or every month that you use the overdraft.

  • How much is free: Some accounts come with an interest free overdraft up to a certain limit, like £250. Some offer a smaller, interest-free buffer of around £5 to £25.

Doing an overdraft comparison will help you find a bank account with an overdraft facility which works for you.

Once you've found a current account with overdraft that you like the look of, you can apply for it online. You can usually get approved for an account with an overdraft facility very quickly online or in a bank branch. You could find you can get an almost instant overdraft.

What's an arranged overdraft?

There are two types of overdraft. One's an authorised overdraft, sometimes known as an agreed or arranged overdraft. The other's an unarranged overdraft, which is sometimes called an unauthorised or unplanned overdraft.

An arranged overdraft is when your bank gives you a specific overdraft limit when you open the account. For example, if your overdraft limit was £500, you'd be able to spend £500 more, after you'd spent all the cash in your account.

An unarranged overdraft is when you don't have a bank overdraft agreed, but you still continue spending when your money's run out. It can also be when you've spent more than your agreed overdraft limit.

Since April 2020, however, providers can no longer charge higher rates of interest for unarranged overdrafts than they do for arranged overdrafts. Banks can also no longer change flat fees for overdrafts, but only a single annual interest rate. This is to make overdrafts fairer for customers.

What's my overdraft limit?

Your overdraft limit is how much you can spend after your balance reaches zero. For example, if you have an overdraft limit of £500, your balance can reach -£500.

Be aware that some bank accounts let you keep spending past your arranged overdraft limit.

What amount of overdraft can you get?

When you apply for overdraft facilities, the bank looks at your income and credit record. That's how they decide whether to give you a bank account and how big your overdraft will be. The better your credit record, the higher your overdraft limit will be.

You should be able to start using your bank overdraft straight away.

If you prove to your bank that you can stay within the limit, after a few months some banks might give you a larger overdraft facility.

Checking your bank overdraft

If you want to check your overdraft limit, just ask your bank. Or, you could sign into your online banking, or check the paperwork you got when you opened your bank account.

If you need to see how much you owe on your overdraft, you can check your balance online, in the branch, by phone or at an ATM.

Most banks also offer text message or email alerts to let you know when your balances goes below a certain point. This can help you keep track of when you're near your overdraft limit.

Can you always get a bank account with overdraft?

If you want a bank account with an overdraft facility, unfortunately it's not guaranteed that you'll be able to get one. There's no such thing as a guaranteed bank account with overdraft.

Every bank has its own set rules on who their overdrafts are suitable for.

When you've found the best bank for overdraft facilities, you can apply for the account you want. The bank will check your credit record and income and then decide whether to give it to you.

Although some bank accounts do have a guaranteed overdraft, not everyone will be accepted for those accounts.

Can you get bank accounts with free overdrafts?

Yes, some bank accounts offer a free overdraft.

This means you can borrow money through a fee free overdraft, with no interest, up to a certain limit.

If you stay within your limit, you won't be hit with any overdraft charges by banks with free overdraft facilities.

You can compare free overdrafts here.

How much do banks' overdraft fees tend to be?

Most overdrafts aren't free. Banks' overdraft fees vary, so it's best to check the details with your bank.

When you're choosing a current account with overdraft facilities, you should try to find one with the best overdraft rates.

You might find it helpful to use an overdraft calculator to work out how much your overdraft is going to cost you. An overdraft interest calculator will show you how much interest you'll pay on your overdraft before you pay the money back.

Overdraft charges are taken from your bank account. If your balance was already £1,000 and you were charged £20, your new balance would be -£1,020.

Overdrafts for people with a poor credit score

If you want a bank account with overdraft for bad credit scorers, you'll probably struggle to find one.

Not many banks will give an overdraft to someone with poor credit history - a bad credit overdraft isn't common. Sadly - while you might be tempted to Google 'bank account with overdraft no credit check' - you'll discover that you always need a credit check to get an overdraft.

There are a few things you can do to help improve your chances of being accepted for a current account with overdraft facilities.

You could:

  • speak with the bank about your options

  • see if you could get accepted for a smaller overdraft limit

  • switch banks

  • try to improve your credit rating.

Don't forget to shop around, as every bank has different requirements.

You can read about bank accounts for bad credit here. But remember that in most cases, a bank account with overdraft for bad credit scorers isn't possible. Bank accounts with overdraft are usually for people with good credit history.

How does an overdraft affect your credit score?

An overdraft is a way of borrowing money from your bank, so it'll show up on your credit record, just like any credit card or loan.

If you apply to borrow money for something else - like a mortgage or a credit card - the bank will check your credit record. They'll use the information to decide whether to lend it to you. If you owe too much on a bank account with overdraft facilities or have an unarranged overdraft, you might not be accepted.

Switch bank accounts with an existing overdraft

If you're in your overdraft and you're being charged for it, switching to a different account could save you money.

Switching means you'll stop paying interest and other charges on your account. You'll also get months or years more to pay off the balance, without fees.

If you find the best bank account for overdraft facilities, you'll save the most money.
It's quick and easy to switch bank accounts. If your overdraft is big, you'll need to find the best current account with overdraft facilities and then make sure they'll allow a large overdraft.

Here's how to switch to another bank account

What happens if i can't pay my overdraft?

If you're having trouble paying back your overdraft, contact your bank account provider and explain your situation. Most banks will work with you to figure out a plan to pay off your debt.

If that doesn't work, you can try contacting one of the debt charities such as StepChange you offer a free service to help people become debt free.

Overdraft bank accounts FAQs


When is my overdraft limit confirmed?


Usually when your application is accepted, after the bank has run a credit check. Some confirm your limit a few days after.


What is the easiest bank account to open with an overdraft?


Most banks have a similar application process online or in their branches. It usually only takes a few minutes to apply.


Can I switch accounts if I am in my overdraft?


Yes, some banks let you if the overdraft they offer is for the same amount you have already. Here is how to switch your overdraft to a new bank.


Can I get an interest free overdraft with my student account?


Yes, student accounts usually come with a free overdraft. Compare student bank accounts here.


How can I keep an eye on my overdraft?


You can check your balance online, using the bank's app, at an ATM or by asking them. You can also set up balance alerts by text or email.


Can I get an overdraft for my business?


Yes, some banks offer business current accounts with an overdraft.
You can compare business bank accounts here.

About our current accounts comparison


Who do we include in this comparison?


Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from providers regulated by the†Financial Conduct Authority (FCA). Here is more information about†How our website works.


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We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

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Last updated: 13 May, 2021