Using Overdraft Every Month | Overdraft Interest

Overdraft repeat use refers to someone who spends more time overdrawn than not.

Why should you try to avoid overdraft repeat use?

Overdrafts are meant for short-term borrowing. Longer periods of overdraft use can be expensive and result in avoidable charges.

When you use your overdraft above any interest-free buffer you have, you'll be charged interest. This is generally at a higher interest rate than other ways of borrowing, like a credit card or personal loan.

For example, if you need to do a food shop before payday, an overdraft can help you bridge the gap.

If you use your overdraft often, you may want to look at your spending habits and other ways of borrowing to reduce the amount of interest you pay.

Explore: Frequently asked questions about overdraft repeat use

How do you know if your account is in repeat use?

If your account is in repeat use, you’ll receive a letter to let you know, along with some options to help reduce the interest you pay. We’ll review how you get on – in managing your overdraft – and contact you again.

We’ll continue to contact you if your account remains in repeat usage.

How can you reduce your debt?

You may want to create a budget to help you manage your finances. This can help you break down your income and outgoings and identify where your money is being spent. You’ll then be able to see where you can make changes or possibly cut back on your outgoings.

Explore: How to get out of your overdraft

Other steps you can take that may help:

Review your tax codes to ensure you're paying the right amount of tax This link will open in a new window
See if you're eligible for any tax credits This link will open in a new window
Check if you're entitled to any government benefits This link will open in a new window
Save money on energy by changing your habits or switching your energy supplier

Using tech and tools

Using online and mobile banking can help you keep track of your spending.

If you’re an HSBC UK customer, you may find it useful to use a tool like Balance After Bills – a feature in the HSBC UK Mobile Banking app. It shows how much you could have left once scheduled bills (standing orders and Direct Debits) are taken into account.

You can also receive text alerts to let you know when you go into your overdraft – or are about to – so you can try to avoid overdraft charges. This service is set up automatically when you take out an HSBC current account, but you can choose to opt out.

Explore: Managing your money with tech and tools

Finding what's best for you

To see how much an overdraft could cost you over a period of up to 31 days, use our overdraft cost calculator.

Other borrowing options include a credit card or personal loan. These may have a lower interest rate and help you set a repayment plan. You should only consider taking out a loan or credit card if you can comfortably afford the repayments. Loans and credit cards are subject to status.

Explore: Credit cards vs personal loans: funding options explained

Where else can you get assistance?

If you’re concerned about your overdraft, get in touch with us and we can discuss your options and how we can support you.

Many independent organisations can provide help and give general advice about managing money.

You can find out about free independent money advisers in your area from:

The following helpline services can offer help and advice:

If money worries are making you feel anxious – you're not alone. There are ways to get help and support with your finances.