Are Bank Overdrafts Really Worth It? 


How to Avoid OverdraftsA bank overdraft is one method of paying bills if you don’t have enough money to cover expenses in your account, but it may not be the lowest cost to you. Usually, bank overdrafts are repaid in less time than other types of credit, like a personal loan.


Sometimes, no matter how hard you try to follow a budget, an emergency expense like a car or home repair throws a wrench in your plans. If you don’t have an emergency fund or credit card, it’s important to carefully review your credit options.


What Is a Bank Overdraft?


A bank overdraft is a type of fee charged to you by your bank when your expenses exceed your available balance in your account. Overdraft fees usually occur for each transaction that exceeds your balance. Most banks offer some type of overdraft assistance so that your expenses can be covered in a time of need rather than decline the charge, but this normally comes at a cost to the consumer.


Even though you may have overdraft protection, this doesn’t mean that you won’t pay any fees or interest (APR) on an overdraft. Banks in the United Kingdom can charge overdrafts in a number of ways, from daily, weekly or monthly fees, to monthly interest or predetermined fees. Some institutions offer a completely fee-free overdraft protection, but this is typically reserved for those with very high credit scores. Your creditworthiness determines the offers that banks and other financial institutions can extend to you, so your actual overdraft fee or rate will vary.


Overdraft Alternatives


Overdrafts can be very costly, but there are other methods of accessing credit. You can apply for a personal loan or payday loan if you’re in a situation where you need more funds than you currently have. While you’ll still have to pay fees or interest, a loan can give you more flexibility to repay the amount borrowed. Payday loans or personal loans may be a less expensive option than overdrafts, but it will depend largely on the rates and terms of the specific loan. Be sure to carefully review the rates and terms before deciding what type is right for you.


Ways to Avoid an Overdraft


If you can’t afford an overdraft fee, there are ways to get around it:

  • Most banks offer some type of account notifications so that you’re alerted if your balance goes below a certain threshold, so utilising these automated notices can prevent further spending.
  • If you just experienced your first overdraft, it doesn’t hurt to contact your bank to (politely) ask them to waive the fee.
  • If your bank offers overdraft protection and you want to avoid fees altogether, you can request that this service is turned off for your account.



Anthony, S. (8 May 2019). How do overdrafts work? Retrieved 20 May 2019, from

Anthony, S. (23 April 2018). Overdraft current accounts. Retrieved 14 June 2019, from


Bonnie P


Bonnie is a Chicago transplant who's committed to seeing the world on a dime. As an avid news junkie with a fascination with finance, she loves to help others do more with less.


The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.