Overdrafts

Overdraft can be a useful tool if you want to borrow money over the short-term, or in an emergency.

An overdraft allows you to borrow money through your bank's current account up to a certain limit. You may find your bank automatically offers you an overdraft, or you have to request this facility.

Many loan providers will also impose a charge if you want to repay your debt early. So check the terms and conditions carefully.

An 'authorized overdraft' is the set limit agreed with your bank. However, you will be charged for using this, and what rate you pay depends on your bank and the type of account you have. This could be interest and/or a monthly fee, so make sure you read the terms and conditions.