How to pay off an overdraft
An overdraft that refills every month is not a debt being repaid — it is a debt being rented. Paying it off means changing that, in steps a bank will actually agree to.
Check priority debts first
Rent, council tax and energy come before the overdraft, whatever the daily charges feel like — priority and non-priority debts explains why. An overdraft repaid at the cost of council tax arrears is a worse position, not a better one.
Work out what the overdraft is costing
Most banks charge around 35–40% EAR on arranged overdrafts — typically more than a credit card. Find the monthly interest figure on your statement and name it: that number is what staying still costs, and it is the budget line you are trying to delete.
Stop the balance growing
An overdraft only shrinks if less goes out than comes in on that account. If the account is your daily spending account, the balance breathes with you. Moving day-to-day spending to a second account — even a basic one — turns the overdraft into a static debt that reduction payments actually reduce.
Agree a stepped limit reduction
Ask the bank to reduce the limit by a fixed, affordable amount each month — £50 or £100 — so repayment is structural rather than willpower. Your budget sets the step size honestly. A limit that falls as you repay also removes the refill temptation that defeats most overdraft plans.
Ask about financial-difficulty support
Told you are struggling, a bank must consider forbearance: freezing or reducing interest, a structured repayment plan, or converting the balance to an instalment loan at lower cost. Put it in writing — the freeze-interest letter works on banks too.
Should you move your wages?
If the bank you owe is the bank your wages land with, it will take the overdraft first each payday. Moving your income to a clean account restores your control over the order — do it before difficulty deepens, not after, and keep paying the overdraft by agreement rather than silence.
Savings, loans and balance transfers
Savings earning 4% while an overdraft charges 39% is arithmetic with one answer for most people — though keep an emergency month aside. A consolidation loan or money-transfer card can cut the rate, but only helps if the overdraft limit is then reduced to zero; otherwise it doubles the debt capacity, which is how consolidation usually fails.
If you cannot afford to repay it at all
That is a different page and an honest one: what happens if you can’t pay your overdraft — and overdrafts go into every formal solution, from a DMP to an IVA or DRO. Free debt advice is the right next step when the budget shows no repayment room at all.