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What to do if…I have gone over my overdraft limit


We can all make mistakes when it comes to banking from time to time. Whether it’s due to an emergency or simple carelessness, we are all human. If you have gone over your overdraft limit, or found yourself in an unauthorised overdraft, there are certain steps you should take to minimise the damage.

What is an overdraft?

An overdraft allows you to borrow money from your current account. You can request one from your bank, or some accounts automatically come with one built in. There are two different types:


• This is an overdraft that will have been agreed in advance with your bank, were you will be allowed to borrow up to an agreed amount. This usually has a set charge that you will accept and agree to prior, and will vary depending on the size of the overdraft and the provider. Some bank overdrafts are free, so it’s worth asking your provider.


• You enter an unauthorised overdraft when the bank has not agreed an overdraft limit with you or when you spend over your agreed limit. Unauthorised overdrafts should try to be avoided as much as possible.

The best way to avoid an unauthorised overdraft is to budget and ensure you don’t overspend. In circumstances where this cannot be helped, and you have a reasons for needing the money (such as a unexpected bill or charge) your bank may be able to help you out. If you take the time to let your bank or building society know that you may need some extra help, you can ask for your limit to be temporarily increased.

What happens if I go into an unauthorised overdraft?

You will more than likely receive a large amount of different charges, depending on how long you have been in the unauthorised overdraft and your provider. These can include:

• Daily fees- these are applied each day you remain in the overdraft and work out at around £5 a day, but can be even more depending on your bank account

• A monthly fee- This can cost anything from £5 to £35, or even more in some cases, and are applied once for each month you are in the overdraft

• Transaction fees- These can total between £10 and £25 and are applied for every cash withdrawal, even the ones that are not successful

What can I do?

If you had not realised you had gone over your overdraft limit, there are steps you can take. If you have only gone over your limit by a small amount, and have available funds elsewhere, transfer the amount you have gone over into your bank account as soon as possible and call your bank to discuss.
If you have no funds to cover the difference, make an attempt to call your bank and explain what has happened. They may not be able to stop all the charges if you have insufficient funds, but if you have a genuine excuse and you are a good customer in general, they may be able to help you out in other ways.

What about the charges?

If this is your first time in an unauthorised overdraft (or the first time in one year for some banks) once the money has been paid back in you may be able to request that your charges are refunded. Banks are not required to do this, but for a first time offender, it can be done as a gesture of goodwill. It’s worth a shot!

What are the consequences?

As well as a mark on your credit file, if you persistently go into a unauthorised overdraft your bank may withdraw your agreed overdraft from you. They are legally entitled to do this at any time, even if you regularly pay into it and never go over the limit, as an overdraft is not recommended (or meant for) long-term borrowing.

We hope this article has helped you if you have found yourself in an unauthorised overdraft. If you have any other tips for our readers please let us know via Twitter @FinancialUK.

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