Ask Our Expert

Free overdrafts

Dear Chris,

I was just wondering whether you know of any good current account deals that come with free overdrafts?

I don’t want to pay a monthly fee.

Best wishes,

Miranda, by email on 5 January 2009

Our money expert says...

If you use your overdraft frequently then it is definitely worth seeking out a current account that offers a free overdraft.

Free overdrafts usually only last 12 months, but depending on how much you’re being charged at present, you could save a fair bit of cash in that year.

There are a several overdraft deals on the market at the moment, but if you don’t want to pay a monthly fee (which is very sensible) then your options are as follows:

Free overdrafts with no monthly fee

Company	Package Name	Interest Rate (AER)	Minimum requirements	Overdraft / Rates	Benefits
	Premier	0.5%	Must pay in £500 a month	0% for 12 months (up to £2,000)	Free annual multi-trip European travel insurance
	Premier Direct	5% (on balances up to £2,500)	Must pay in £500 a month	0% for 12 months (up to £2,000)	Dedicated switching service

The table above will change to reflect current best buys, but at the time of writing, your choices are the Premier or Premier Direct accounts from Alliance & Leicester (www.alliance-leicester.co.uk) or the Plus account from the Co-op (www.co-operativebank.co.uk).

Each of these accounts requires you to pay a minimum amount into your account each month, so you should be sure you can commit to this before you switch.

The biggest free overdrafts are available with the Alliance & Leicester accounts – both offer overdrafts up to £2,000 which are free for 12 months.

Whether the Premier or Premier Direct account will suit you better depends on whether you would prefer to earn 6% interest on your current account for a year (with the Premier Direct account) or get free European multi-trip travel insurance (with the Premier account).

It’s also worth noting that the Premier account can be managed in branch, whereas the Premier Direct account can only be managed online, by phone or using mobile banking, so if you like face-to-face contact with your bank the Premier account may be preferable.

The Co-op offers a much smaller free overdraft on its Plus account – set at £200 – however this is not limited to 12 months, so if you are looking for a long-term benefit, this account could suit you.

Switching current accounts is easy (see our guide to switching current accounts for handy tips) but make sure you read the terms and conditions of any account before you sign-up for it.

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