Best current accounts for overdrafts Research shows more high earners using overdrafts
19 August 2011
A new report shows that a third of high earners rely on overdrafts to get them through the month, with around half of all consumers not shopping around for the best overdrafts.
Research from Experian has revealed that 33% of high-income families now rely on overdrafts of more than £1,000. This is up from the one-in-seven families who relied on overdrafts in 2008.
But choosing a current account with a decent overdraft limit and good rates can be a minefield. Our guide to the best current account for overdrafts will show you where to go.
Dan Moore, money expert at Which?, said: 'Overdrafts come at a cost, so however much you need extra cash it pays to shop around. A little research can save you plenty in the long run.'
Best bank accounts for overdrafts
The accounts below are our top three accounts for overdrafts. These accounts offer the best rates for customers who regularly use their overdraft facilities. We show the best three accounts based on our scenario of someone running a £500 authorised overdraft for two weeks a month.
1. First Direct 1st Account
This account requires minimum monthly funding of £1,500. It has an annual overdraft rate of 15.9%. The annual cost of a £500 authorised overdraft for two weeks each month is £17. The Which? customer score is 92%.
2. Smile current account
This account requires regular monthly payments, with an annual overdraft rate of 15.9%. The annual cost of a £500 authorised overdraft for two weeks each month is £34. The Which? customer score is 87%.
3. Nationwide FlexAccount
The account requires no minimum monthly funding. This account comes with an annual overdraft rate of 18.9%. The annual cost of a £500 authorised overdraft for two weeks each month is £40. The Which? customer score is 71%.
Alternatives to overdrafts
If you don't have an overdraft facility on your account or you are looking for different methods of borrowing such as credit cards, unsecured loans or peer-to-peer lending, visit our guide to your loan options.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.