How much does an overdraft cost in the UK?

UK overdraft costs vary by bank. Typical rates: 19.9-49.9% APR for arranged overdrafts. Daily fees can be £0.50-£2.00. Unarranged overdrafts can cost £5-£15 per day plus fees. Use our calculator for personalized cost estimates.

What is the difference between arranged and unarranged overdraft?

Arranged overdraft: Pre-agreed limit with your bank, lower fees. Unarranged overdraft: Going over your limit without agreement, much higher fees (often £5-£15 per day). Since 2020, FCA rules have made unarranged overdraft charges similar to arranged in many cases.

How is overdraft interest calculated in the UK?

UK banks calculate overdraft interest daily on the amount you're overdrawn. Daily interest = (Overdraft amount × Annual Rate) ÷ 365. Some banks charge a daily fee instead of interest. Most banks now use a single APR for arranged overdrafts, typically 19.9-39.9%.

Are overdraft fees regulated in the UK?

Yes, the FCA regulates overdraft fees in the UK. Since April 2020, banks must use a single simple annual interest rate for arranged overdrafts and cannot charge higher fees for unarranged overdrafts. All charges must be clear and transparent. The average arranged overdraft rate is now 35% APR.

Overdraft Calculator UK - Bank Overdraft Interest & Fees Estimator

Bank	Arranged Rate	Unarranged
Barclays	35% APR	35% APR
Lloyds	39.9% APR	39.9% APR
HSBC	39.9% APR	39.9% APR
NatWest	39.9% APR	39.9% APR
Santander	39.9% APR	39.9% APR
Monzo	35% APR	35% APR
Starling	35% APR	35% APR

📝 Complete Guide to Overdraft Costs in the UK

This overdraft calculator UK helps you understand the true cost of using your bank overdraft. Overdrafts are a common form of short-term borrowing, but they can be expensive. Understanding the charges helps you make informed decisions about your finances.

💰 What is an Overdraft?

An overdraft allows you to spend more money than you have in your current account. Types of overdrafts:

Arranged Overdraft: Pre-agreed limit with your bank, lower interest rates
Unarranged Overdraft: Going over your limit without agreement, higher fees
Student Overdraft: Special rates for students, often interest-free
Business Overdraft: For business accounts, different rates

📊 How Overdraft Interest is Calculated

UK banks calculate overdraft interest daily:

Daily Interest: (Overdraft Amount × APR) ÷ 365
Monthly Cost: Daily Interest × Days in Month
Example: £500 overdraft at 35% APR = £0.48/day = £14.40/month
Total Cost: £500 + £14.40 = £514.40

📈 UK Overdraft Statistics (2026)

Average arranged overdraft rate: 35% APR
70% of UK adults have an arranged overdraft
Average overdraft limit: £1,200
Average overdraft usage: £350
Unarranged overdraft fees reduced by 50% since 2020
Banks earned £2.5B from overdrafts in 2025

💡 How to Reduce Overdraft Costs

Pay Off Quickly: Reduce overdraft as soon as possible
Switch Banks: Compare rates (some banks offer 0% introductory)
Use Savings: Use savings to clear overdraft
Consider Loan: Personal loans may be cheaper for larger amounts
Budget Better: Track spending to avoid overdraft
Ask for Lower Rate: Some banks negotiate rates

⚡ Overdraft Alternatives

Credit Card: 0% balance transfer cards
Personal Loan: Lower rates (6-15%) for larger amounts
Savings: Use emergency fund
Budgeting: Cut unnecessary spending
Side Hustle: Extra income to clear debt

⚠️ Important Considerations

Overdrafts are more expensive than many loans
Unarranged overdrafts can damage credit score
Banks can withdraw overdraft facilities
Always check your bank's fee structure
Consider switching to a fee-free bank

Overdraft Calculator UK

📊 Your Overdraft Details

📊 Cost Breakdown

📊 UK Bank Overdraft Rates