Five places you can get an overdraft for free

The number of free overdrafts has declined in recent years, but some banks are still offering them – although they often come with strings attached.

The number of current accounts offering free overdrafts has shrunk dramatically in recent years, as have the interest-free periods available. Following the banks' victory in the 2009 Supreme Court case against the Office of Fair Trading many banks reduced their overdraft fees for unauthorised overdrafts, only to then increase them for authorised overdrafts. And they've kept on going up.

Free overdrafts
If you have to be overdrawn, you'll want to pay as little for your debt as possible. You can keep the costs low by taking advantage of an interest-free deal. If you're prepared to switch your current account, here are five accounts which will allow you to do just that (albeit only for a short time in some cases):

1) Santander 123 current account
You can have an interest-free arranged overdraft for four months with the Santander 123 account. The bank gives an example of £1,200, but it may be less, depending on your credit rating.


However, you must pay in a minimum of £500 a month to the account, set up at least two Direct Debits and it will cost you £2 a month. To offset the monthly charge, you'll earn cashback of up to 3% on much of your monthly spending. You also need to switch using the bank's switching service.

2) Santander Everyday current account
Santander's Everyday current account also offers a four-month interest-free overdraft period when you switch to it using the bank's dedicated switching service. Again, it gives an assumed overdraft amount of £1,200, but this may be less. There's no fee to run the account but no additional perks either.

3) First Direct 1st account
Another way you can dodge overdraft fees is to choose a current account with a free overdraft buffer. This will only work if you go into the red by a relatively small amount. If you can pay in at least £1,500 a month, try the First Direct 1st Account which offers a £250 interest-free buffer. You'll also get £100 for switching if you're a new customer.

4) The Co-operative Bank Current Account Plus
Alternatively, the Co-operative Bank Current Account Plus has a £200 interest-free buffer as long as you can pay in at least £800 a month.

5) NatWest Select account
You'll only get a £100 interest-free limit from NatWest's Select account, so it's definitely not a good option if you're frequently going into the red. But you don't need to pay in a minimum amount every month and so it could be an option if you need a small buffer.

Paying off your overdraft
If you only have a limited interest-free arranged overdraft period, like those offered by the Santander accounts, you'll need to have a plan in place to pay it off or you'll start being charged daily fees. For some top tips, read Three ways to get rid of your overdraft for good!

And avoid going into an unauthorised overdraft at all costs, as you'll soon rack up high charges and daily fees.

This is a classic lovemoney article that is regularly updated



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