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What will happen if I'm in repeat overdraft use?
Different lenders have different approaches to helping their customers manage their repeat overdraft use. For example, they will:
- Write to you and inform you about the way you’re using your account, and the cost of this
- Provide you with information to help you to review your monthly commitments
- Signpost you to further help, if they think you need it
Where there are indications that you're in financial difficulty, your bank must work with you to help reduce your overdraft use and address the problem. However, your bank still needs to abide by other FCA rules, such as communicating clearly with you, and treating you fairly. Their action to address repeat use of your overdraft should not cause you further financial difficulty.
How can I reduce my overdraft use?
The first step is to speak to your bank or overdraft provider. They may be able to suggest some steps you can take to reduce how much you owe, or reduce your overdraft limit.
The next step to reducing your overdraft use is to create a budget. This will tell you what your income and spending are each month, and may help you identify areas where you could reduce your spending. Reducing your spending should let you free up money to help you reduce the amount you use your overdraft each month.
There are numerous ways that you can reduce your spending, such as:
You might also be able to increase your income by checking you're getting the benefits you're entitled to.
If you have access to digital tools, it’s a good idea to use them to keep an eye on your balance over the course of a month. Mobile banking makes it easy to keep an eye on your balance, and many banks offer alerts to let you know when you’re near to going into your overdraft or near to your limit.
I'm not sure if I need help with my finances
If you're worried you may need help with your finances, then you should try our 60-second debt test.
By answering a few simple questions we'll be able to tell you if you need debt advice. Answer the questions below and we'll help you understand how close you are to having a debt problem and suggest what your next steps could be.