Overdraft facility

An overdraft facility can be arranged for any current account. If you decide to use this facility, a certain amount will be credited to your account (usually 2-3 times your monthly income); you may use it for any purpose. Do not forget that this money is not yours, it is borrowed from the bank.

The ABC of an overdraft facility:

  • an overdraft facility can be arranged at a bank;
  • an overdraft facility is a short-term credit facility enabling you to draw down smaller amounts;
  • an overdraft facility can be used to borrow funds for any purpose;
  • the interest rate is higher than the rate charged for a mortgage loan or consumer credit.

Important decisions to be made when arranging an overdraft facility - see Six steps to consider when choosing a loan.