What is an Overdraft?

Helping you understand
Overdrafts

What is an Overdraft?

  • There are two types of Overdraft: Arranged and Unarranged.
  • An Arranged Overdraft is when we agree to a limit that lets you spend a bit more money than you have in your current account.
  • An Unarranged Overdraft is when you spend more money than you have and you haven’t previously arranged an overdraft limit with us or you have exceeded your existing overdraft limit.
  • It is important to remember that both types of overdraft have associated charges.

How do Overdrafts work?

  • An overdraft lets you borrow extra money through your current account. For example, if you have no money left in your account and you spend £30, your balance would be -£30. This means you’re using an overdraft.
  • An overdraft is a form of debt and is repayable on demand. Always make sure you have enough money in your current account, or a suitable Arranged Overdraft limit in place before any payments are due to come out of your account.
  • An Arranged Overdraft could help you manage your money if you have to cover short-term expenses such as an unexpected bill.

Compare our Arranged Overdraft charges

Choose your account type and compare our overdraft fees and charges. We will only charge you interest and fees if you actually use your Arranged Overdraft.

Learn more about Unarranged Overdrafts

Could you start saving?

Use our calculator to find out what an overdraft could cost you.  Compare Arranged and Unarranged Overdraft charges to see if you could start saving money.

 

Help to stay in control of your spending

Mobile Banking App

Our Mobile Banking App helps you keep track of your spending on the go. Keep an eye on money coming in and out of your account.

Free Text Alerts

You can set up free text alerts and get notifications when your balance goes above or below a certain limit. We can also let you know if you're about to slip into an Unarranged Overdraft.

Interest Free Buffer

If you stay within your interest free buffer for your current account type you won’t be charged any Arranged Overdraft interest.

Ready to set up an Overdraft?

You can apply for an Arranged Overdraft online if you are registered for digital banking. Compare our range of overdrafts and decide if there is one that's right for you.

To apply, you must be a UK resident, 18+ and have an eligible Royal Bank of Scotland current account. Subject to approval.

Not sure an Overdraft is for you?

If you're unsure which type of borrowing to use, our Borrowing Options Tool can help you find out if a loan, a credit card or an overdraft is right for you.

Something else we can help you with?