Any advice on this website is general in nature and has been prepared without considering your objectives, financial situation or needs. Please read the product disclaimer and Terms and Conditions (PDF 987KB) documents and consider your individual circumstances before applying for a St.George Personal Loan. Credit criteria, fees, charges, terms and conditions apply. Information correct as of 27 September 2021. Interest rates are subject to change.
2. Interest is charged daily and is charged on the balance owing on your account for the end of that day if it is a debit balance. If the balance owing on your account exceeds the overdraft limit (or if a transaction would cause this to happen) we may, without notice, decline, stop or reverse the transaction or we may choose to honour the transaction. You will be charged a fee when we exercise our discretion to honour the transaction. If the overdraft limit is exceeded, you must immediately repay the excess. Higher interest charges may apply until you do so.
Unless otherwise specified, the products and services described on this website are available only in Australia from St.George - A Division of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.
Interest is only calculated when your end-of-day account balance is negative. This means you can go in and out of negative balance during the day and, provided that your end-of-day account balance is positive, you won’t get charged any interest.
You just need a few more dollars. There just isn’t quite enough in our account. Or there is none at all!
Some banks will let you go into a negative balance on your transaction account and some won’t. Which banks will let you overdraw your bank account? A lot. Read more below.
What is an overdraft?
Quite simply, an overdraft is a withdrawal of money from your bank account that’s larger than the amount of money in the account. Sometimes you’re overdrawn accidentally, but sometimes you have a pre-arranged amount that you can overdraw your account by.
Overdraft facilities are available on personal transaction accounts and business accounts rather than on savings accounts. In many ways, an overdraft is an unsecured line of credit that you have access to if you need it. It’s similar to a credit card because the amount (or credit limit) is pre–arranged and has a limit. You may also pay a fee or interest on the amount that you’re overdrawn by.
How to get a bank account overdraft
Overdrafts are actually a popular alternative to credit cards because the interest rate or fees are generally lower than those associated with a credit card and you don’t usually have a set repayment schedule to maintain.
An overdraft is also linked to your transaction account so you don’t need another card, another PIN and another monthly statement to deal with.
Having a pre–arranged overdraft ready for you can offer peace of mind because you won’t get returned direct debits (and the resultant fees) or failed payments while you’re shopping.
Applying for an overdraft
Most banks will let you apply for an overdraft online via their internet banking portal or their mobile / tablet app.
If you already have a transaction account with the bank it’s a simple process. You could also apply for an overdraft with another institution if you find one with more suitable features.
There are criteria you’ll have to meet, as with any credit agreement, but they’re not as strict as the requirements for a larger loan, credit card or mortgage. You’ll need to be at least 18 years of age, have some form of regular income and be an Australian citizen or resident.
When you’re applying for an overdraft, you’ll need some form of ID, your tax file number and your bank account details, as well as details of your income and regular outgoings.
Which bank accounts offer overdrafts?
Most of the bigger banks, like Commonwealth Bank, Westpac, ANZ and NAB, as well as some of the smaller institutions offer overdrafts on some of their transaction accounts. Generally, the more basic accounts, or accounts for younger people, don’t have overdraft facilities.
Do overdrafts have credit limits?
Yes, overdrafts have limits, although these can range from a few hundred dollars to tens of thousands. Your personal limit will vary according to your income and other circumstances, as well as how much you feel you need. If your account has overdraft fees or an interest rate that you don’t feel comfortable with, then you can either settle for a smaller arrangement or look elsewhere.
It’s also important to keep an eye on your bank and overdraft balance to make sure you don’t go over it or you may face extra fees and higher interest rates. The ANZ Access Advantage account, for example, charges $6 per day for overdrafts that are over the agreed limit up to a maximum of $60 per month.
How can you use your overdraft facility?
While your overdraft isn’t “free” money, you can use the facility as you would use your actual money. You can make EFTPOS payments, for example, as well as BPAY, online transactions and transfers.
Are you wondering how to overdraw your bank account at an ATM? It’s simple, just withdraw money as usual and as long as you’re within your agreed limit, you’ll be able to take the money out.
The advantages of having an overdraft on your bank account
Now you know how to overdraw your bank account you might be asking yourself what the advantages are. There are several benefits to having an overdraft, even if you rarely use it, including:
- You don’t have a set repayment schedule to keep up with
- You only pay interest and fees on the amount you use
- You’ll have easy, pretty much seamless access to extra funds, and
- The overdraft is linked to your transaction account so your salary or benefits will come in regularly to clear or reduce it.
The disadvantages of having an overdraft on your bank account
There are few disadvantages to having an overdraft facility, but here are some things to lookout for:
- It’s easy to get too comfortable with going into your overdraft, which can lead to the debt “hanging around” for a long time and having an adverse effect on your credit rating
- If you don’t use your overdraft very often, you might be paying a monthly service fee that you don’t need to; if you find you rarely use your overdraft, it might be an idea to close it down and get a basic account.
- You can get hit by extra fees and interest rates if you go over your agreed limit, and
- Your bank can call in the overdraft at any time and you’ll have to pay clear the balance; this rarely happens, but it’s something to bear in mind.
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