Living in your overdraft can feel like a cycle that is impossible to break. You are not alone, and there are real solutions that can help you get back on track. Let us show you your options.
Overdraft debt is incredibly common in the UK and nothing to feel ashamed about. Whether you slipped into your overdraft during a difficult month and never managed to get out, or your overdraft has grown over time with charges and interest, you deserve support and a way forward.
The good news is that overdraft debt is unsecured, which means there are several proven solutions available to help you clear it. From negotiating directly with your bank to formal debt solutions, the right option depends on your circumstances and how much you owe.
Overdraft debt can build up quickly, especially with daily or monthly interest charges. Here is what you need to know about how overdrafts work and why they can become a problem.
Since 2020, banks must charge a simple annual interest rate on overdrafts instead of daily fees. However, rates of 35% to 40% APR are common, which means overdraft debt can grow quickly if you stay in the red for long periods.
Many people find themselves trapped in a cycle where their wages go in and immediately cover the overdraft, only for them to slip back into it before the next payday. This can go on for months or even years without the balance ever reducing.
Your bank can reduce or remove your overdraft facility at any time, usually with notice. If this happens and you cannot repay, the debt may be passed to a collection agency. Getting advice before this happens gives you more options.
Regularly using your full overdraft can lower your credit score, as it suggests you are relying on borrowed money. If your overdraft is recalled and registered as a default, this stays on your credit file for six years.
How to pay back your overdraft depends on your situation. Here are the main options available to you, starting with the simplest approaches.
Your bank has a duty to treat you fairly if you are struggling. Contact them to explain your situation and ask about repayment plans, reducing your overdraft limit gradually, or converting the overdraft to a fixed loan with set monthly payments. Many banks have specialist support teams for customers in financial difficulty.
If your overdraft is manageable, try setting a goal to reduce it by a small amount each month. Review your spending, cancel unused subscriptions, and redirect any spare money towards clearing the balance. Even small steps forward can make a real difference over time.
Some banks offer interest free overdrafts for new customers. Switching your current account could give you breathing room to pay off the balance without charges building up. Make sure to check the terms carefully and have a plan to clear the overdraft before any introductory period ends.
If your overdraft debt has become unmanageable, or if you have other debts alongside it, speaking to a free debt advisor is the best next step. They can look at your full financial picture and recommend the right solution, whether that is a debt management plan, an IVA, or another option.
If your overdraft debt has become unmanageable, or you have multiple debts to deal with, a formal debt solution can provide real relief and a clear path forward.
A legally binding agreement that combines your overdraft and other unsecured debts into one affordable monthly payment. After 60 months, any remaining debt is written off.
Best for: People with £6,000+ total debt who can afford £100+ per month
Learn about IVAsA flexible arrangement where you make one reduced monthly payment towards your overdraft and other debts. Your advisor deals with creditors on your behalf.
Best for: People who can repay in full but need lower monthly payments
Learn about DMPsFind answers to common questions about overdraft debt and how to deal with it.
You have already taken the first step by looking for help. Our free assessment takes just a few minutes and will show you the best options for your overdraft debt. There is no obligation and no judgement.
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Combine your debts into one affordable monthly payment with a flexible plan.
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60 days of legal protection from creditor action while you find a solution.