Overdrafts are a way to borrow money through your current account. This can be useful for short-term borrowing.
Even if you’re not sure if you’ll use it, an arranged overdraft can be helpful for covering unexpected costs.
What are overdrafts good for?
Short term borrowing
An arranged overdraft is there if you need to borrow money for a short period. If you need a longer term borrowing option see our other ways to borrow.
Only pay when you use it
You’ll only pay interest when you go into your overdraft. There’s no cost to set one up.
Giving you more control
You can set up, change, or cancel your overdraft in the app.* And use text alerts to manage your account and avoid charges.
*Manage your overdraft online, over the phone or in branch. Subject to application and approval. To cancel you’ll need to pay back any money owed.
On this page
Overdrafts explained
What is an arranged overdraft?
An arranged overdraft is one you apply for and choose an amount before using. If you’re approved, your bank will give you an 'arranged overdraft limit'. This is an amount you can use whenever you need it. Applying for an arranged overdraft won’t affect your credit score, but overdrafts show as borrowing on credit reports. So, when you’re in your overdraft, you’ll see the amount owed on your credit report.
What is an unarranged overdraft?
If you don’t have enough money in your account to pay for something, you're requesting an unarranged overdraft to make that payment. Unarranged overdrafts aren’t guaranteed, and if you’re not approved the payment will be rejected. If you do get the overdraft, you’ll be charged interest on the amount you borrow. Using an unarranged overdraft can negatively affect your credit score and make it more difficult to borrow in the future.
How much will my overdraft cost in pounds and pence?
- You’ll be charged 39.90% EAR interest on the days you use your overdraft. This is the annual rate and doesn’t include fees or charges.
- We'll never charge you more than £30 each monthly billing period for unarranged overdraft interest.
- You can find the full details in our banking charges guide.
Representative example based on assumed arranged overdraft of £1,200
39.90%
EAR (variable)
40.10%
Representative APR (variable) on Spend & Save Plus accounts
39.90%
Representative APR (variable) on Spend & Save and all unarranged overdrafts
- We’ll let you know how much interest you need to pay and give you notice before any interest payments are taken from your account
- Spend & Save Plus rate includes £100 interest-free overdraft and the £3 monthly account fee
Cost for arranged overdrafts
As an example, if you borrow £500 it will cost you:
Spend & Save
| 7 days | 30 days | 60 days |
|---|---|---|
| £3.26 | £13.99 | £28.07 |
Spend & Save Plus
You don’t pay interest on the first £100 you borrow. So, if you borrow £500, you’ll only pay interest on £400.
| 7 days | 30 days | 60 days |
|---|---|---|
| £2.61 | £11.19 | £22.45 |
Cost for unarranged overdrafts
We'll never charge you more than £30 each monthly billing period. As an example, if you borrow £500 it will cost you:
| 7 days | 30 days | 60 days |
|---|---|---|
| £3.26 | £13.99 | £28.07 |
Monthly cap on unarranged overdraft charges
We'll never charge you more than £30 each monthly billing period for unarranged overdraft interest. To make comparing bank accounts easier for you, banks are setting a maximum monthly charge for unarranged borrowing fees.
Each bank may charge different amounts, but all banks are explaining it the same way, with the same wording.
For information on overdrafts on our accounts that are no longer available to new customers, please visit the other accounts page.
Each current account will set a monthly maximum charge for:
a) Going overdrawn when you have not arranged an overdraft
b) Going over/past your arranged overdraft limit (if you have one)
This cap covers:
a) Interest for going over/past your arranged overdraft limit
b) Fees for each payment your bank allows despite lack of funds
c) Fees for each payment your bank refuses due to lack of funds
How to apply
To apply for an overdraft
You'll need to
You should not apply if
Before you apply
Important information
Ready to apply?
The fastest and easiest way is with the app
Log in, then go to your current account
Tap on the 'Manage' tab
Choose 'Apply for overdraft' and follow the instructions on screen
Ready to apply?
Or apply online
Use the button below to log into Internet Banking
Follow the instructions on screen
If you prefer to apply in branch or over a video call, you can book an appointment in advance.
Struggling to repay your overdraft?
If you're struggling to repay your overdraft, or you're always using your full limit, we're here to help. Talking to us won’t impact your credit score.
Manage your overdraft in the app
The TSB Mobile Banking App is the fastest and easiest way to increase, decrease, or cancel your overdraft.
Reducing your overdraft
To reduce or remove any overdraft you must have paid back any money you owe us, or your account must be within your new arranged overdraft limit.
Need any help?
Chat with us
Use the TSB Mobile Banking App to get help with queries 24/7.
Give us a call
Lines open 8am - 8pm Monday to Sunday.
Visit us in branch
It’s easy for you to pop in and manage your finances.
Have you thought about...
Personal loans
For new and existing customers
- Non-TSB customers can apply for loans from £1,000 to £25,000
- TSB current account customers can apply to borrow £300 to £50,000
- Get a quote in 2 minutes and you could have the money on the same day
Credit cards
For new and existing customers
- Get 0% interest based on your personal circumstances
- Cards to meet your needs - purchases or balance transfers
- Keep track of your balance and make payments in the app or online
Overdraft FAQs
If you are over 18, you could be eligible for our arranged overdraft. You don’t need to be an existing customer, however if you are you could be eligible to borrow more.
Use our overdraft eligibility checker to find out if we can offer you an overdraft. If you apply for one of our arranged overdrafts, we will carry out a check on your personal and financial circumstances, including a full credit check.
As an overdraft is a form of credit, it can affect your credit score and report. An overdraft will appear on a credit report as debt, so lenders can see if a customer has an overdraft, as well as the limit and what they are using.
Unless you go beyond your overdraft limit or have payments refused, an arranged overdraft is unlikely to negatively impact your credit score.
Using an arranged overdraft wisely, such as regularly clearing the overdraft and staying in the agreed limit, can even improve your credit rating. Lenders will be able to see you are a reliable borrower. This means you are more likely to be approved for other credit applications. You can read our guide on credit to find out how making full credit repayments on time can improve your credit score.
Regularly going over the overdraft limit will harm your credit rating, as it shows lenders you are struggling financially. Using an unarranged overdraft also signifies to lenders you are struggling to manage your finances, so can damage your credit rating.
If for example you have £100 in your account and need to make a £200 payment, an overdraft allows you to do so. Once the payment is complete, your account balance will be -£100.
However, you will also be charged interest on the amount you have borrowed. With an arranged overdraft there will be an interest-free limit, then you will be charged on the amount borrowed over this limit. If the overdraft is unarranged, you will be charged on the whole amount you borrow.
An overdraft is different to a loan. With an overdraft, you can borrow an amount of money from your bank up to an agreed limit, as and when you need it.
Whereas a loan is a fixed amount of money which is borrowed over an agreed period and repaid with regular repayments.
There are a few ways you can repay an overdraft. Regular repayments into your account can get you out of your overdraft. Also make sure you can make the interest payments.
It’s up to you how much you pay back and when you make a payment. This is so long as you’re on top of managing your overdraft, such as staying within your arranged overdraft limit and making sure there are regular amounts of money coming into your account.
Overdrafts are charged monthly and the amount you pay back depends on how much you’re overdrawn by and the type of current account you have. Also, as interest is charged monthly, the amount you need to repay can change each month, meaning you will be charged interest on top of interest, which can be costly if it is not repaid.
Other options for repaying your overdraft include moving the overdraft to a money transfer credit card.
If you go over your overdraft limit or are in an unarranged overdraft for a prolonged period, this is recorded on your credit report. The bank can also default your account. If you have savings with us, we can also perform a ‘right of offset’, where we reclaim money from your savings to repay unpaid debt.
The overdraft limit is the maximum amount you can borrow from your arranged overdraft account, before going into an unarranged overdraft. For example, if you have agreed with your bank to have an arranged £2,000 overdraft, you can borrow this amount, so your balance will be -£2,000. However, if you borrow more than this amount, this amount is unarranged which can harm your credit score. If you go over your payment limit, this payment can also be refused due to a lack of funds.
You can have an arranged overdraft for as long as you like, if you are able to stay within the limit and pay the interest charged. You should also make sure you have money being paid into your account regularly. Arranged overdrafts are intended for short-term borrowing, so we will regularly review how you use your overdraft. If, when we review your account, we find that your arranged overdraft is no longer suitable it may be reduced or removed. But we'll contact you first.
Important information
Overdrafts are subject to application and approval and are repayable on demand.
The representative APR is the Annual Percentage Rate of charge. You can use it to compare the overall cost of credit between different lenders.
