Manage expenses with an overdraft loan
Learn more about how overdraft loans work and how to use them to manage your personal expenses effectively.
In a nutshell, an overdraft loan, is a convenient, short-term credit option linked to your current account, giving you immediate access to money, up to an agreed limit, whenever and wherever you may need it.
When do you need an overdraft loan?
If what’s coming into your account is not enough to cover what’s going out, an overdraft can provide a flexible source of additional funds to cover those extra expenses, giving you a little more room to breathe when money is tight. You also save on interest costs as you only pay interest on the amount you use.
There to make sure you have enough funds in your account, even when you may not, an overdraft is a good safety net that allows monthly debit orders and timely payments to be honoured even after you’ve exceeded your available funds, helping to protect your credit record and avoid late payment penalties.
How does an overdraft loan work?
- An overdraft is linked to your current account, and you borrow money through your daily banking transactions account, making it easier to stay on top of your expenditures
- This means there is no need to track or manage a separate credit account, or to transfer available funds between accounts
- Designed as a revolving facility (your credit is automatically renewed as it’s paid off), an overdraft is a great solution for any temporary cash flow problems, unexpected expenses or emergency costs
- Because you choose your ‘borrow limit’ (the excess amount you can spend on top of your available funds), you have full control over exactly how much you can borrow every month, so you can keep track of your finances and stay within an amount you can manage.
Just be careful though to not spend all your available funds, and all your additional overdraft, as exceeding your agreed negative balance can be a costly affair in penalties and interest rates.
Alternatively, there are other personal loan options for planned or specific once-off payments.