Published 17 July 2026

What To Do If You’re Struggling to Pay Off Your Overdraft

Overdrafts can be a helpful safety net, if used correctly. However, if you find yourself constantly overdrawn or struggling to pay your overdraft off, you can get stuck in what feels like a loop of interest and debt. All of which can affect your ability to pay for essential costs and affect your credit score.

That’s why it’s important to know all the facts before you use one. If you need an overdraft or you’re struggling to pay yours off, we’ve rounded up some helpful information and advice for you below.

What is an Overdraft & How Does it Work?

An overdraft is a type of borrowing linked to your current account. Depending on the type of overdraft and your bank’s terms, you may be charged interest and fees for using it.

There are two types of overdrafts, which are:

Authorised or Arranged Overdrafts: These are planned in advance. You agree to a limit with your bank and can take out more money than you have in your account, up to that limit.

Unauthorised or Unarranged Overdrafts: These are unplanned overdrafts that happen when you spend more than you have available in your account, without agreeing to a limit with your bank beforehand. This includes going over the limit of an authorised or arranged overdraft. Regularly using an unarranged overdraft can affect your ability to obtain credit, as lenders will take your conduct into consideration when assessing applications for credit.

How is Arranged Overdraft Interest Charged?

Arranged overdraft interest is charged on the amount you borrow. The interest rate varies depending on your bank and the type of current account you have.

How banks charge you this interest varies too. A few examples include:

Barclays: Charges a variable interest rate on the amount of your overdraft that has been used.

- Lloyds: Interest is charged daily at the end of each day, but only if you use the arranged overdraft. However, they do offer a grace period. So you have until the end of the day to bring your account back into credit (i.e. a positive balance) to avoid interest for that day.

NatWest: Don’t charge fees for using an arranged overdraft. They only charge interest on the amount of overdraft you use (the amount depends on the type of current account you have).

Santander: The first £1,000 of the arranged overdraft is usually interest-free, but if you go over that, interest is charged.

How is Unarranged Overdraft Interest Charged?

Each bank will deal with unarranged overdrafts differently. A few examples include:

HSBC: On 19th May 2026, HSBC stopped charging interest on unarranged overdrafts.

Nationwide: Nationwide generally aims to decline payments if there isn’t enough money available in the account rather than allowing customers to go into an unarranged overdraft. If you do end up going into an unarranged overdraft, no charges will apply, but you won’t be able to withdraw cash or transfer money until your account balance is back in credit or is within its limit (if you have an arranged overdraft).

NatWest: The monthly cap on unarranged overdraft interest charges for their standard adult current accounts is £18.80 (but this does depend on the type of account you have).

Santander: Don’t normally charge interest on an unarranged overdraft. When you try to make a payment that would take your balance below zero, they make a decision whether to allow or reject the payment based on your circumstances. However, they still charge interest for the portion of your balance within your arranged overdraft limit (if you have one).

What Do I Do If I’m Struggling to Pay Off My Overdraft?

Work out a budget to see what you can afford: Use bank statements, payslips, debit/credit card statements and receipts to work out a budget. Always make sure you have enough to cover your priority bills and debts first. If you have money left over after that, you can use it to start paying off your overdraft and other debts.

If you can’t afford to, contact your bank: If you have no money left over, or your financial situation is unlikely to improve, you should get in touch with your bank. They might agree to:

Temporarily pause interest or fees on your overdraft debt.

A repayment plan.

Reduce the interest on the money you owe them.

Other Options:

Change direct debit payment dates for priority bills: If you have any direct debits for priority bills, see if you can change the payment date to come out directly after you have been paid. Paying your priority bills first is most important as there are much bigger consequences of non-payment.

Switch to a temporary interest-free overdraft: Do some research into which banks offer interest-free overdrafts (they are usually only interest-free for a limited time). This will make it easier for you to pay the overdraft off, because there won’t be constant interest to keep up with.

Get free* debt advice: If you’re really struggling to make ends meet, the best option is to get free*, confidential debt advice to see what other options are available to you. This could include entering into a debt solution.

**Get Free*, Confidential Overdraft Debt Advice**

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