Authorised overdraft fees
Most banks will charge you a fee and interest when you use the facility. These vary from bank to bank and account type to account type so it is worth checking with them in advance.
However, as a guide, here’s what some of the high street banks say:
Banks Fees Note
Barclays 75p per day Up to £1,000
Lloyds £6 per month If used, charged once
TSB £6 per month If used, charged once
You’ll also pay interest on the amount overdrawn, which can be at interest rates of close to 20% EAR (equivalent annual rate).
Due to the size of these fees it is only worth using the overdraft as short term funding. If you’re likely to be overdrawn for any length of time it might be worth looking at another form of debt.
If you’re a student, talk to your bank about which overdraft facility your account has. Many banks have special student accounts that may have different fee structures.