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Overdraft Debts

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What is an Overdraft?

An overdraft can be likened to a financial buffer. It's essentially a form of credit added to your bank account which allows you to use more than what's currently in your account, up to an agreed limit. The overdraft is an option that many people can ask their bank for.

It can be a convenient way of borrowing as your account has already been set-up and, for the bank, it's a simple function of adding the overdraft facility. But it's crucial to note that overdrafts are common type of debt and the bank can feasibly request full repayment ‘upon demand’. This means that the lender can, effectively, request you pay the overdraft limit at any time.

Also, it's worth bearing in mind that overdrafts can often have higher interest rates than other ways of borrowing – in addition to fees for the creation and administration of the overdraft itself – which can make them an expensive way to borrow money.

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Sharon McDougall

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Call: 0800 0639 250

What are Arranged and Unarranged Overdrafts?

Overdrafts can either be arranged or unarranged with your bank. Unsurprisingly, an arranged overdraft is where you have taken up the option of an overdraft with them and have been granted an overdraft limit which you can spend. It's likely that you'll be charged interest on the overdraft – though some banks offer initial interest-free periods – but it's unlikely you'll be hit with other charges or fees unless you exceed your limit.

Charges and fees tend to come into play with unarranged overdrafts; this is where you have spent more money than what's in your account. Depending on the bank and type of account, some banks will enable the unarranged overdraft and lend you the money; i.e. you have £100 left in your account and buy something for £150 and the bank lends you the additional £50 automatically. Whereas other banks will simply reject the transaction from going through. If you do exceed your bank balance without permission, you can expect to be hit with bank charges and interest fees, which are usually higher than if the overdraft was arranged.

Struggling with Overdraft Debts?

Dipping into your overdraft might seem like an harmless step to take but for many people, fees and interest that is applied can turn a small debt into an unmanageable one. We help individuals across Scotland that are suffering with overdraft debts and we help organise a structure for them to be debt-free. Speak to one of our friendly, experienced advisers for free today.

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Common Debt Issues

Just some of the issues we can help you with

Store and Credit Cards Debts
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Store and Credit Cards Debts

Council Tax Arrears
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Council Tax Arrears

Mortgage and Rent Arrears
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Mortgage and Rent Arrears

Car Payments
Car Parking Fine

Car Payments

County Court Judgment
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County Court Judgment

Other Common Debts
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Other Common Debts

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Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority

Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.

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