Overdraft in UK — Arranged and Unarranged

Updated 27 May 2026

Since FCA 2020: one single APR for both arranged and unarranged overdrafts (typically 39.9%). Basic bank accounts under Payment Accounts Regulations 2015 do not include an overdraft. Refugees and new arrivals generally cannot get an arranged overdraft immediately — you need a current account history first.

In short

Basic bank account (Monzo, Revolut, Starling on basic tier, or PAR 2015 accounts) — no overdraft by design. Current account with 3-6+ months history → you can apply for an arranged overdraft. Since 2020, unarranged overdrafts cost the same APR as arranged — no advantage to accidentally going into the red.

Understand my account type Alternatives with thin credit file Gone overdrawn without authorisation

01 FCA 2020 — single APR for arranged and unarranged

Single simple APR — same for arranged and unarranged overdraft
No fixed charges allowed (no daily/monthly flat fees)
Typical market APR: 39.9% (Lloyds, Barclays, NatWest, Halifax)

02 Basic bank account = no overdraft

Payment Accounts Regulations 2015 require 9 designated banks to offer free basic bank accounts without overdraft. This is a protection, but also a limitation.

Designated banks (PAR 2015): Lloyds, HSBC, Barclays, NatWest, RBS, Santander, Nationwide, Co-operative Bank, Yorkshire Bank
Overdraft access opens when you upgrade to a full current account

03 Eligibility

3-6+ months account history
Regular UK income deposited
No recent defaults
Credit check on application

New arrivals (6-12 months UK): typically not available. Focus on credit-builder card first.

04 Gone overdrawn without authorisation

Top up the account as soon as possible (APR accrues daily)
Call the bank — many offer a £25-50 grace buffer without interest
Apply for arranged overdraft facility going forward
If this keeps happening — contact StepChange for a free plan

05 Alternatives with thin credit file

Credit-builder card (Vanquis, Capital One, Aqua): £200-500 limit, 0% utilisation builds credit score faster than overdraft
Credit union: small loans at reasonable rates for thin-file applicants
Employer salary advance: some employers offer via Wagestream or Hastee

General information only, not financial advice. APRs change — check your bank's current terms.