An overdraft is a facility on your current account designed for short term borrowing. When your balance goes below £0, you enter an overdraft. You can request our overdraft services either on an arranged or unarranged basis.
We would always encourage you to request our overdraft services on an arranged rather than unarranged basis.
An arranged overdraft is a set amount you’ve agreed with us in advance. There are no charges for an arranged overdraft but you’ll pay interest. The interest rate is variable, which means it can change over time. Should there be any changes to our interest rates we will communicate them to you in advance.
You’ll go into an unarranged overdraft if you go over your arranged limit or your account balance falls below £0 without an arranged overdraft in place.
You can request our overdraft services in advance and if we agree to your request (by agreeing an overdraft limit, or an increase to an existing overdraft limit) we will tell you your overdraft limit and confirm the terms in writing. An arranged overdraft lasts for 12 months and we will write to you towards the end of this period with information about what we may be prepared to offer you when your current overdraft expires.
An unarranged 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.
Your payments might also be refused if you try to go over your overdraft limit or you try to go overdrawn without an arranged overdraft. Any type of borrowing shows on your credit file. However, an unarranged overdraft shows as arrears, which can negatively impact your credit file and may make it harder for you to obtain credit in the future.
How you'll be charged when you use an overdraft
When you use an overdraft, you will be charged:
- interest on the amount you are overdrawn by
- daily and monthly charges if you go into an unarranged overdraft
How to manage your overdraft
Change your overdraft limit
You can request to change or remove your overdraft at any time by calling 03457 212 212 (charges apply). You must make regular payments into your account to reduce the amount you owe.
If you have a Smilemore account, you won't be able to reduce your overdraft lower than the interest free £260 overdraft facility.
Text alerts when you go into your overdraft
To help manage your money and avoid/minimise charges you might pay, we send overdraft text alerts if you go into or you’re about to go into an arranged or unarranged overdraft. We will also send alerts if you have payments due that may not be paid. As long as we have your mobile number, you’ll be automatically opted in for overdraft text alerts. You can opt out of arranged and/or unarranged overdraft alerts at any time. You can contact us to do this in online banking by sending us a secure message or chatting to us on webchat.