UK Overdraft Charges Explained: 40% APR Is Standard

Since the 2020 FCA reform, UK arranged overdrafts are charged at a single APR around 40%, which is higher than most credit cards.

Most current accounts now charge the same rate whether you are £10 or £1,000 into your overdraft - the simplification meant prices went up for moderate users.

Treat an overdraft as a debt to clear, not a buffer to live in. Pay it off using the snowball or avalanche method alongside any card debt.

Switching to a fee-free overdraft account or one with an interest-free buffer is the single fastest way to stop the bleeding.