BANKING GUIDE GUIDE

Overdrafts

Banks will often allow you to overdraw your current account. If you have arranged for an overdraft facility on your account you will be charged an authorised overdraft rate – the rate of interest that you will pay on your overdrawn balance if you remain within your authorised limit. If you have not arranged an overdraft facility or exceed your authorised limit you will be charged interest at the unauthorised overdraft rate. This rate will be much higher than the authorised rate. You may also be charged a fee for being overdrawn. Any fee levied will depend on whether the overdraft is authorised or unauthorised.

Some banks will allow a certain overdraft without charge, for example £100, but for higher amounts you will usually be charged for the facility.

Current Accounts

These accounts offer the facility of a chequebook / cashcard and do not require any notice to be given to withdraw funds. The accounts vary in the facilities offered such as cheque guarantee cards, debit cards and overdrafts etc. It may be possible to operate some of these accounts via branch, post, telephone or the Internet.

Account features such as minimum balance requirements, minimum amount of transaction, whether a cash card is available, any limits to the number of withdrawals, and any rate of bonuses or guarantees will vary depending on which account you choose.

Current Account and Offset Mortgages

A current account mortgage allows you to operate your mortgage borrowing through a current account. This method enables you to save interest as your normal cash-flow will alter the outstanding debt. You will be required to pay your salary into the account.

An offset mortgage allows you to keep your balances e.g. mortgage, savings, current account etc in separate accounts but all balances are offset against each other thus allowing the possibility of reducing the interest paid and could result in the mortgage being repaid early.