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These Are the Best Banks in the UK for Overdraft in 2023

Byron Mühlberg, writer at
Jan 20, 2023
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Overdrafts are a convenient way to access extra funds in a moment of need, but like any loan, they carry certain risks. Moreover, not all banks offer the same terms and conditions, meaning you'll need to do your research if you want to find the best bank in the UK for an overdraft to suit your preferences.

The problem is that it can be too easy to miss the bevvy of the different charges that come with overdrafts, which might lead you to end up paying much more than you might need.

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Starling Bank offers reasonable interest rates compared to other UK banks, high limits, and all-round fair conditions on overdraft facilities. Alongside its market-leading current account, we think Starling Bank is by far the best bank to choose from if you're interested in a low-cost online banking option!

In this article, we take a closer look at the overdraft facilities offered by various banks in the UK, specifically Starling Bank and Monzo and how they compare to the offerings at traditional banks.

Whether you're a student, shopaholic, business owner, or just in a pinch and need extra funds, this guide will hopefully provide you with the information you need to help you make an informed decision!

Key Facts About Overdrafts in the UK

💹 Typical interest rate

35% - 40%

🏛 Regulatory body


📝 Application options

Online, phone, in-branch

🏆 Best bank for overdrafts

Best UK Banks for Overdrafts

Banks in the United Kingdom normally offer overdraft facilities as part of their current account services, meaning if you're eligible for credit, overdraft is generally quite accessible. (However, overdraft facilities aren't offered by non-bank financial institutions like Revolut or Monese, as a banking license is required to issue credit.)

In most cases, overdraft facilities can be either arranged (where you and your bank agree on a specific limit) or unarranged (where you're allowed to spend more than what's on your balance without making prior provisions with your bank). Though arranged overdrafts normally incur lower costs, no matter how you overdraw, banks always charge interest and sometimes additional fees for these services. You'll usually also be required to pay back the borrowed amount within a specific time frame.

If ever you're planning to overdraw, it's also vital for you to understand the terms and conditions of your bank's overdraft facility to avoid costly charges and minimise your chance of racking up a mountain of debt.

Below, we go over the two best banks for overdraft in our opinion: Starling Bank and Monzo, before looking at how they differ from overdraft facilities at high-street banks.

Starling Bank

Starling Bank is a fully-authorised bank that's well known for its fee-free current account. In fact, because this account is entirely free and gives you access to an impressively complete range of financial services (not only including overdraft facilities, but also loans, joint accounts, youth cards, pensions, Euro and US dollar accounts, interest, etc.), we think Starling offers the best online bank in the UK — one we recommend as a complete replacement for an account at a high-street bank.

  • Account name: Personal Account
  • License: Full banking license
  • Account maintenance fee: £0.00
  • Overdraft limit: £5,000
  • Interest rates: 15%, 25% and 35% EAR (variable)
  • Overdraft fees: £0
  • Reputation & security: Excellent


Monzo is arguably the UK's most popular online-only bank. An excellent choice if you're looking to escape the high fees of high-street banks, Monzo charges no fees for day-to-day card use (e.g. cashpoint withdrawals and card payments) in the UK and abroad. In addition to Monzo's fair overdraft facilities, because it offers one of the most advanced and comprehensive savings systems we've seen from any challenger bank (allowing lots of flexibility over your time horizon and savings goals), we think the bank is especially well-suited for managing and growing wealth, regardless of your individual goals.

  • Account name: Monzo
  • License: Full banking license
  • Account maintenance fee: £0.00
  • Overdraft limit: £3,000
  • Interest rates: 19%, 29% or 39% EAR (variable)
  • Overdraft fees: £0.00
  • Reputation & security: Very good

See the following chart to compare Startling Bank and Monzo in terms of their overdraft facilities:

Arranged overdrafts

Arranged overdraft limits



Unarranged overdrafts


  • 15%
  • 25%
  • 35%
  • 19%
  • 29%
  • 39%

Additional fees



Cost to borrow £100 for 7 days



Cost to borrow £1,000 for 30 days




Calculated: 19/01/2023

High Street Banks

If you're not looking for a brand-new bank account to handle your overdraft needs, you'll be able to use your existing bank account, though the interest will usually be a little higher, not to mention the overdraft charges that are charged.

Here is an overview of the overdraft facilities offered by a few of the major high-street banks in the UK:

  • Barclays offers an arranged overdraft facility as well as an unarranged one. Arranged overdrafts are charged at an interest rate of 35.0% EAR (variable) up to a maximum of £5,000.
  • HSBC also provides arranged and unarranged overdrafts, charged at 39.90% EAR up to a limit of £3,000.
  • NatWest offers an arranged overdraft facility and a planned overdraft, which allows customers to set up a regular overdraft that they can use whenever they need it. The rate is 39.49% EAR for arranged overdrafts up to a maximum of £5,000.
  • Santander offers arranged and unarranged overdrafts, with different charges for each. Arranged overdrafts come with a rate of 39.94% AER up to £5,000.

FAQ About Overdrafts at UK Banks

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