How to Pay Off an Overdraft

How to get out of an overdraft: five practical steps

1. Check how far overdrawn you are at the lowest point in a normal month and note the interest rate or charges on your bank statement.
2. Cover housing, food, utilities and other priority commitments before setting an overdraft repayment target.
3. Use a monthly budget to identify a sustainable amount to reduce the overdraft each payday.
4. Estimate the cost with the Overdraft Cost & Pay-Off Planner linked below, allowing for any new borrowing during the month.
5. Review progress after a complete pay cycle and contact your bank or seek free debt help if you cannot afford essential bills or repayments.

A payment into your account does not necessarily reduce the overdraft permanently if you need to borrow again for everyday spending. Your bank’s actual interest calculation and charges may differ from the planner.

Measure how deep into it you really are

Check your lowest balance during a normal month, not just the balance on payday. If you are paid £2,000 and the account starts payday at −£900, the overdraft is effectively absorbing a large part of your income before the month begins.

Create a small monthly reduction target

Trying to remove the entire overdraft at once can leave you short and send you straight back into it. A repeatable target—such as reducing the amount used each payday—can be easier to sustain.

Separate bills from spending

Work out essential monthly commitments first, then set a weekly amount for flexible spending. Reducing uncertainty during the month helps stop the overdraft from expanding again.

Check the cost

Look at your bank's current overdraft interest and charges. If you have other unsecured debts too, compare costs only after dealing with priority commitments. You can compare repayment approaches in our free Debt Planner, but keep overdraft interest and ongoing borrowing in mind. Avoid automatically replacing an overdraft with another loan unless the total cost and repayment are genuinely manageable.

Ask the bank for help if you are struggling

If charges or repayments are contributing to financial difficulty, contact the bank early. If you cannot afford essentials or have several debts, free debt advice can help you assess the whole situation.

Prevent a return

Once you reach zero, aim to keep a small current-account buffer. Even £50–£100 can reduce the chance that a slightly higher bill pushes you back into borrowing.

A repayment is not always a reduction in debt

Illustrative first period: £1,000 overdrawn, 39.9% EAR, no interest-free buffer, 30 days, £100 repayment and £50 new borrowing. The planner estimates £27.98 interest, then applies the repayment and borrowing at the end of the period.

£1,000 + £27.98 + £50 − £100 = £977.98 still overdrawn. The debt falls by about £22.02, even though £100 was paid in. With no new borrowing, the same model ends at £927.98.

This is a simplified constant-balance illustration, not a bank statement forecast. Your actual daily transactions, interest rules and charges can change the outcome. A salary payment that temporarily brings the account above zero does not establish a sustainable reduction.

Review the next complete pay cycle

1. Write down the lowest balance and the interest charged.
2. Check whether the planned reduction left enough for food, housing and bills.
3. Compare new borrowing with the amount paid in; adjust a target that forces you back into borrowing.
4. Ask the bank about support if the overdraft keeps growing. Do not assume a higher limit or a new loan solves the underlying shortfall.

MoneyHelper explains overdrafts and routes to help. Support depends on your circumstances; a reduction or waiver of interest is not guaranteed.

MoneyHelper — overdrafts explained