Overdraft
Cards & borrowingAn agreement with your bank that lets you spend more than the money in your current account.
Overview
Overdrafts can be useful for short-term cash flow, but they are a form of credit and can be reported to credit agencies.
Using a large portion of your overdraft consistently may affect affordability and utilisation.
Why it matters
- It can influence how lenders assess your finances.
- Fees and interest can add up if overused.
- Overdraft usage can affect your credit profile.
FAQs
Does an overdraft affect my credit score?
It can. If your overdraft is reported, high usage or missed payments can affect your score.
Is an overdraft considered debt?
Yes. It is a type of credit that must be repaid.
Related terms
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