Finding the best ways to borrow Bank account overdrafts

bank notes and coins banknotes

Avoid unauthorised overdrafts as fees can be very high, pushing you further into debt

Authorised overdrafts

An authorised overdraft on your current account can be an excellent short-term way to borrow. Some banks even offer an interest-free overdraft. Which? Recommended Provider First Direct, for example, offers a 0% overdraft of £250, and an APR of 15.9% on authorised amounts above this limit.

For the best bank account deals for customers who regularly use their authorised overdraft, read free Which? reviews of current accounts.

Unauthorised overdrafts

As detailed in the recent , fees for unauthorised overdrafts vary enormously and can be disproportionately high. If you think you're going to go overdrawn, it's always best to speak to your bank to try to arrange an authorised overdraft.

Different banks have different fee structures for unauthorised overdrafts, and fees often vary depending how much you go overdrawn by. Santander, for example, charges a £5 fee on transactions below £10, but £35 on transactions over £30.

As an illustration, take a customer in January 2011 who makes a payment from his bank account that takes him into an unauthorised overdraft of £85.87. He then makes another payment that takes his unauthorised overdraft up to £146.39. He is overdrawn for two days in a row during the month.

Fees from Halifax/Bank of Scotland would be £10, while Barclays would charge £22 and HSBC, Lloyds TSB and First Direct would all charge £25 in fees. At the more expensive end of the scale, Nationwide and NatWest/RBS would each charge £50, Clydesdale/Yorkshire Bank would charge £75, and Santander would impose a hefty fee of £95.

Most of these fees could have been avoided by extending an authorised overdraft before making the transaction.

Which? works for you