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.
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