- Types of Debt
Overdraft Debt
Payday loan debt can spiral quickly due to high interest. Understand your options and how to stop the cycle of borrowing.
What is overdraft debt?
An overdraft lets you spend more than what’s in your current account, up to an agreed limit. Overdraft debt builds when you rely on it regularly, or exceed your agreed limit, resulting in interest and, in some cases, additional fees.
How does it build up?
Many people use their overdraft as a short-term buffer, but if income doesn’t stretch to cover essentials, it’s easy to become reliant on it every month meaning you’re constantly starting each pay cycle already in debt.
Priority or non-priority?
Overdraft debt is a non-priority debt, though becoming reliant on it consistently is often a sign that wider budgeting or debt support would help.
What happens if you don't pay?
Your bank may charge daily or monthly interest on the overdrawn amount.
Going beyond an agreed limit can trigger additional fees.
Persistent unauthorised borrowing can affect your relationship with your bank, including account restrictions.
It's reported to credit reference agencies and can affect your credit score.
- Check Your Options
How Debt Bridge can help
If overdraft reliance is part of a bigger picture of unaffordable debt, we can help you understand whether combining it with other unsecured debts through a Debt Management Plan or IVA could ease the monthly pressure and get you back to a positive balance.