9.7m people overdrawn by £709

New research by TotallyMoney has investigated overdraft charges and found that some high street banks are charging customers up to 49.90% interest on their borrowing.

The research showed that one in five people (19%) are overdrawn by £709 each day, with total overdraft borrowing at £5 billion. with many high street banks charging daily interest rates of between 35% and 49.9%.

The average overdrawn balance, somebody paying interest at a typical rate of 39.9% APR could find themselves paying £283 in interest each year with the average interest rate on credit cards currently at 21.85%, while the effective rate on new personal loans is 8.79%.

The research estimates that 9.7 million (19%) adults are overdrawn and by an average of £709. With many high street banks charging between 35%-49.90% APR, this can make overdrafts an expensive way to borrow — especially if customers find themselves in permanent debt.

Being overdrawn by the average balance of £709, with a typical APR of 39.90% can cost £283 in interest each year. This rises to £354 for an APR of 49.90%.

Analysis from the Bank of England found that average interest rate on credit cards is currently 21.85%, while the effective rate on new personal loans is 8.79%. Meanwhile, 0% money transfer and purchase cards mean customers can borrow without paying any interest at all.

Applying for an overdraft will usually require a credit check and will show up on a customer’s credit report. However, only Lloyds, Halifax, Monzo and Starling offer cheaper rates to customers with better credit scores. The table below highlights the APRs offered by some of the UK’s biggest banks.

Alastair Douglas, CEO of TotallyMoney said “For some, overdrafts are a ghost debt. Customers often treat as an extension of their current account, there’s no separate card, bank, or app — and the interest charges can get lost among their account transactions.

“Some might have forgotten they ever applied for their overdraft, while others won’t be aware of the interest rates being charged. It’s important to remember that an overdraft is debt — in the same way that a credit card, loan, or buy now pay later agreement is. And this is especially true if it feels like you’re spending most of the month sitting in the red. That’s because overdrafts are often one of the most expensive ways to borrow, with cheaper options often available. ”

Andrew Hagger, Personal Finance Expert, Moneycomms.co.uk said “Authorised overdraft rates look way out of kilter, with the cost now almost double that charged on many credit cards. Paying from 35% to nearly 50% for an overdraft seems unfair as rates at this level usually associated with borrowers who have previous credit issues and are classified by banks as ‘sub-prime’.”

Bank	Overdraft rate
Santander	39.94%
HSBC	39.90%
Lloyds	19.9% to 49.90%*
Halifax	19.9% to 49.90%*
Nationwide	39.90%
First Direct (first £250 free)	39.90%
NatWest	39.49%
Barclays	35.00%
Starling Bank	15% – 35%*
Monzo	19% – 39%*
*Subject to credit status.  Research conducted by Moneycomms.co.uk March 2025