An overdraft is an extension of credit by a bank to cover withdrawals or payments (such as bills) from an account lacking sufficient funds.
It is usually the bank that decides whether or not to allow overdrafts, so you should advise it if you do not wish your account to go overdrawn.
If you decide to have overdrafts on your account, you should bear in mind that:
- Interest will be charged
- Overdraft fees will be charged
- If you are a consumer, there is a statutory cap on the cost of the overdraft (legal limitAbre en ventana nueva), such that the sum of the fees and the interest cannot exceed an equivalent annual percentage rate (APR) that is 2.5 times the statutory.
Note that the overdraft fee is different from the past-due notification fee some banks may charge when reminding a customer to repay an overdraft. This fee must be included in the terms and conditions and the bank must have actually taken steps to recover the overdraft before it can charge it.
Find out more in our 2017 Complaints Report (in Spanish) (123 KB)
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