Overdrafts

Using an overdraft

Using an arranged overdraft is unlikely to have a major impact on your credit rating, as long as you don’t go beyond your arranged limit or have payments refused.

However, if you use an unarranged overdraft regularly or continuously for 30 or more days, it could have a negative affect on your credit rating. That’s because this shows lenders you may be struggling financially.

Applying for an overdraft

Applying for an overdraft as a one-off won’t affect your credit rating under normal circumstances. However, if you make several applications within a short period of time, this can have a temporary impact on your rating.

If you want to check if you’re likely to get an overdraft without making an application, you can use our eligibility checker. This will have no impact on your credit rating.

Overdraft eligibility checker

An arranged overdraft is where we agree an overdraft limit with you in advance. You’ll then be able to borrow up to that limit. You can apply for this kind of overdraft when opening your account, or at any time later.

An unarranged overdraft is when your account goes overdrawn and you don’t have an arranged overdraft, or you go over your arranged limit. Using an unarranged overdraft can have a negative impact on your credit rating. We may also decline payments that would involve using an unarranged overdraft. However, in most cases we will try to make your essential payments even if you don’t have enough money in your account.

With both types of overdraft, you'll usually have to pay interest on what you borrow (above any interest free amount that applies to your account).

You'll have to pay interest on the amount you've borrowed, at the applicable overdraft interest rate, above any interest free amount that applies to your account.

We don’t charge overdraft interest if covering funds are paid in before 23:45 on the day you go overdrawn.

Use our overdraft calculator to see how much using an overdraft would cost you.

You’ll have to pay interest if you have an unarranged overdraft above any interest free amount that applies to your account. The table shows the amount of interest that applies to each current account. The monthly maximum charge for unarranged borrowing for all current accounts is £20 except for the Private Banking Account which has a monthly maximum charge for unarranged borrowing of £10,000.

Monthly cap on unarranged overdraft charges

1. Each current account will set a monthly maximum charge for:

(a) going overdrawn when you have not arranged an overdraft; or

(b) going over/past your arranged overdraft limit (if you have one).

2. This cap covers any:

(a) interest and fees for going over/past your arranged overdraft limit;

(b) fees for each payment your bank allows despite lack of funds; and

(c) fees for each payment your bank refuses due to lack of funds.

EAR (Effective Annual Rate) takes account of the interest rate, the compounding of interest and how often interest is charged. It doesn’t include any other fees or charges.

APR (Annual Percentage Rate) is the rate at which someone who is borrowing money is charged, calculated over a period of 12 months. It takes into account not just the interest, but also any other charges that may have to be paid and any interest-free amount.

Our overdraft text alerts help you avoid being charged overdraft interest.

As long as we have a up-to-date mobile number for you, we’ll send you an text alert when you’ve gone overdrawn or if we know you're about to.

Can I opt out of text alerts?

You can opt out of receiving text alerts at any time by calling us or asking in-branch. But if you do, please bear in mind that you’ll be opting out for all your current accounts with us.

If you opt out of text alerts or we don’t have an up-to-date number for you, you could end up paying interest that you might otherwise have avoided.

If you’re finding it hard to manage your overdraft or financial situation in general, please get in touch. We'll talk to you about your situation and help you find a solution.

Please use our Live Chat option if it’s available, or you can find our contact details on this page.

You can also get free, impartial advice from a number of independent organisations, including:

If your overdraft application is successful, your arranged overdraft limit usually is ready to use straight away.

Unlike a personal loan, overdrafts do not involve regularly scheduled monthly repayments. However, we do expect you to make payments into your current account, at least monthly, to reduce what you owe.

Overdrafts are designed for short-term borrowing only. Being in your overdraft for an extended period could lead to you being charged higher amounts of interest. Our calculator tells you how much an overdraft through your HSBC current account could cost up to a period of 31 days.