Overdrafts
Banks will often allow you to go overdrawn on your current account.
If you have arranged for an overdraft facility on your account, you will be charged an authorised overdraft rate - the rate of interest that you will pay on your overdrawn balance if you remain within your authorised limit.
If you have not arranged an overdraft facility or exceed your authorised limit you will be charged interest at the unauthorised overdraft rate. This rate will be much higher than the authorised rate. You may also be charged a fee for being overdrawn. Any fee levied will depend on whether the overdraft is authorised or unauthorised. It is important that you check what you are charged for going overdrawn on your current account, as rates on these can reach over 30%.
Some banks will allow a certain overdraft without charge, for example £100, but for higher amounts you will usually be charged for the facility.
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