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 the pay the interest charged.