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  5. What is an overdraft? And what's the difference between an 'arranged' and an 'unarranged' overdraft?

What is an overdraft? And what's the difference between an 'arranged' and an 'unarranged' overdraft?

An overdraft is how much you’ve spent over your agreed credit limit (borrowing through your current account). So if your account’s at zero and you spend an extra £1, that means you’re at -£1. This is what you’d call an overdraft. And there are two kinds: arranged and unarranged.

An arranged overdraft is a set amount you can borrow, that you’ve agreed with your bank. There are no charges for this as it’s already been agreed by your bank, but you do pay debit interest on however much you go overdrawn by.

An unarranged overdraft is what happens if you spend more than you have in your account, or go over your agreed limit on your arranged overdraft.

An unarranged overdraft is what happens if you spend more than you have in your account, or go over your agreed limit on your arranged overdraft. You will be charged for entering into an unarranged overdraft and you will pay debit interest on whatever you go overdrawn by.

To help you manage your account and avoid / reduce charges, we will automatically send an overdraft text alert to notify you when you are about to enter, or when you have entered into an unarranged overdraft. The alerts will also be sent when you don’t have enough funds in your account to make all of your scheduled payments that working day. This will give you the opportunity to pay in sufficient funds to bring your account balance back to either a positive balance, or within your arranged overdraft limit.

If you haven't already, you can register your mobile phone number when you've logged in to online banking. Once you have logged in, go to ‘Profile’ and select ‘change your contact details’. You will need your card reader and a valid debit card to do this. Alternatively, you can contact us. Find out more about the Overdraft Alerts Service.

Learn more about overdrafts

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