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Glossary · Banking

Overdraft

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Definition: An arranged borrowing facility linked to a current account. Authorised overdrafts must be priced as a single APR since April 2020.

FCA rules require firms to identify and help customers showing signs of financial difficulty using their overdraft. Arranged overdraft rates are typically 30–40% APR — often more expensive than a personal loan or 0% credit card for sustained borrowing.

Primary source: legislation.gov.uk/ukpga/2000/8

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