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Home Improvement Loan
Home Improvement Loan

Get To Know Over Draft

Over Draft

When you use your overdraft (often called “going into your overdraft”), you’re getting into debt. An overdraft should be for short-term borrowing or emergencies only. It’s important to manage an overdraft like any other debt and make sure the costs don’t get out of hand. This guide looks at how overdrafts work, how to stop going over your limit and how to avoid bank charges.

Home Improvement Loan
Home Improvement Loan

How Process Works

Features of Over Draft

 An overdraft lets you borrow money through your current account by taking out more money than you have in the account – in other words you go “overdrawn”. There’s usually a charge for this.

 You can ask your bank for an overdraft – or they might just give you one – but don’t forget that an overdraft is a type of loan. If you need to borrow money, there might be cheaper ways to do it. It’s important to always find the cheapest way to borrow.

Types of overdraft

 Authorised overdrafts: are arranged in advance, so they’re also known as ‘arranged’ overdrafts. You agree a limit with your bank and can spend money up to that limit.

 Unauthorised overdrafts: these are also known as ‘unplanned’ or ‘unarranged’ overdrafts and happen when you spend more than you have in your bank account without agreeing it in advance. This includes going over the limit of an authorised overdraft.


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