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What is overdraft repeat use?

Overdraft repeat use refers to the frequent use, value and reliance on an overdraft that may cause avoidable charges. Repeat use customers may be experiencing, or at risk of experiencing, financial difficulty.

As a responsible lender, we monitor overdraft accounts to check if they’re being used repeatedly. We consider a number of factors, including: 

  • what percentage of the overdraft is being used over a 3-month period
  • how much is paid in, and out, of the account that the overdraft is linked to

Why should you try to avoid overdraft repeat use?

Overdrafts are meant for short-term borrowing. For example, if you need to do a food shop before payday, an overdraft can help you bridge the gap. Because overdrafts are only meant to help you cover expenses in the short-term, they usually charge a higher rate of interest than other ways of borrowing like a credit card or personal loan.

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

Explore: Overdraft repeat use FAQs

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

If you’re an HSBC customer and your account is in repeat use, we’ll send you a letter to let you know. You'll be given some options, which may help reduce the amount of interest you’re paying. We’ll then review how you go in reducing your debt, and contact you again after 6 months.

If your account is still in repeat use after 12 months, we’ll contact you again. To help prevent you getting into any further debt, we may reduce or suspend your overdraft limit.

How can you reduce your debt?

To get your finances in order, you may want to consider creating a budget. 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 create a budget

Other steps you can take that may help:

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 for spending, once scheduled bills (standing orders and Direct Debits) are taken into account.

We’ve also set up 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 overdraft, but you can choose to opt out.

Explore: Managing your money with tech and tools

Finding what's best for you

To find out more about overdrafts or 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 to consider, 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.

Explore: Credit cards vs personal loans: funding options explained

Where else can you get assistance?

There are a number of independent organisations who 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:

Further help with your finances

If money worries are making you feel anxious – you are not alone. Get help and support with your finances.

Explore: Money worries

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