Almost 10 million adults are overdrawn in the UK by an average of £709, according to Totally Money.
The overdraft rates charged by some big banks make them an expensive way to borrow, especially for customers who are permanently overdrawn.
Which banks charge the most for overdrafts?
The following table shows the overdraft rates charged by both high street and online banks.
| 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 |
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As the table shows, Lloyds and Halifax charge overdraft interest of up to 49.9%, subject to credit checking.
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For the average overdrawn balance, somebody paying interest at a typical rate of 39.9% APR could find themselves paying £283 in interest each year, according to TotallyMoney. This rises to £354 for an APR of 49.90%.
Cheaper borrowing alternatives
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%, highlighting that there are cheaper options available. 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.
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 at 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’.
“If you’re only borrowing for the odd day here and there it’s less of an issue, however if you’re in the red for a couple of weeks or more each month these rates might only make your financial position worse.
“My tip is to ditch your high-cost overdraft and use a credit card instead — it’s a far more cost-effective way of managing your cash flow, even more so if you’re able to clear your statement balance in full each month. It’s easy to fall into the habit of relying on your overdraft month after month and the eye watering interest rate could soon make a bad situation far more serious.”