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How to get out of your overdraft

Arranged overdrafts can be handy for covering unexpected expenses, but consistently using one for your day-to-day costs can create problems. If you’re deep into your overdraft and don’t have any savings available, here are some actions you may want to consider.

1. Reduce your expenses

Are you using a budget? If not, now could be a good time to create one. 

A budget lets you see where you’re spending money each month and if there’s anywhere you could cut back. 

It helps to split your budget into ‘needs’ and ‘wants’. Needs are essentials, like rent and groceries. Wants might include eating out and holidays. If possible, start by trying to reduce your wants wherever you can. 

Pay particular attention to your Direct Debits to check they’re correct. There may be services or subscriptions you’re paying for that you no longer use, or could pay less for.

2. Set yourself a repayment plan

Any money you’re able to free up can help reduce how much you’re relying on your overdraft. You may also be able to put this money towards reducing the amount you’re overdrawn.

Unlike personal loans and credit cards, there are no set repayment dates for overdrafts. This can make it tricky to prioritise paying it off. But it’s important to get into the habit of chipping away at the amount you owe.

Try to set yourself a target of how much you want to pay off each month and then treat it like any other bill. Factor it into your budget so the money is accounted for and you’re not tempted to spend it on other things.

3. Look at other borrowing options

A personal loan may give you a lower rate of interest than an overdraft. So if you don’t think you’ll be able to repay your overdraft in the short term, you may want to consider taking out a personal loan to repay your overdraft. You’ll then be able to repay the loan in a more structured way – with set repayment amounts and dates – over a longer time period. 

If you’re looking at a personal loan, it’s essential to check the maximum APR you could be charged. This will help you understand how much interest you'll have to pay so you can compare it with how much you’re being charged on your overdraft.

Explore more: Loans explained

Another option is a money transfer credit card with a 0% interest period. This type of credit card pays money into your account, which you could use to cover your overdraft. You’ll then be able to repay the money you owe without incurring overdraft interest. If you do this, it’s a good idea to consider whether you now need your full overdraft limit or whether you can reduce it.

You’ll need to make sure you can afford at least the minimum repayments before you apply for a credit card. It’s also essential to check the APR, as you’ll be charged interest if you still owe money once the 0% interest period comes to an end.

4. Reduce your overdraft limit

To help resist temptation, you may want to reduce your overdraft limit as you work your way out of it. This could help you avoid going back into it once the debt is cleared.

5. Speak to someone

If you feel like your overdraft is unmanageable, you may want to consider getting some professional advice. 

If you’re an HSBC customer, you can call our team of specialists on 0345 850 0622 to get a helping hand.¹

Lines are open:

  • 8am to 9pm, Monday to Thursday
  • 8am to 6pm, Friday
  • 8.30am to 4pm, Saturday

Please note, lines will not be open on Christmas Day, Boxing Day and New Year's Day.

You can also get in contact with a debt organisation. The Citizens Advice Bureau, National Debtline or StepChange Debt Charity may be able to provide some professional assistance.

What next?

¹We accept calls via Text Relay. To help us improve our service, and in the interests of security, we may monitor and/or record your call.

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