Can I switch bank accounts if I’m in my overdraft?

Many people are keen to switch their bank accounts for the cash benefits that are available to new customers. However, what happens if you’re in your overdraft? Our guide will help you find out how you can switch bank accounts.

Caroline Ramsey Published on 12 November 2018. Last updated on 14 September 2021.
Can I switch bank accounts if I’m in my overdraft?

If you are planning on switching your bank account, you might be worried if you are currently in your overdraft and what the repercussions of this will be. However, the good news is that just because you’ve dipped into your overdraft or have used quite a large portion of it, doesn’t mean that your bank has got hold of you indefinitely.

Find out more about switching your bank account when you’re in your overdraft below.

Is it possible to switch your bank account when you’re overdrawn?

The easy answer is yes, you can switch your bank account if you have a good or relatively clean credit history and you haven’t gone over your arranged overdraft limit.

However, don’t sit back and get too comfortable just yet, it’s still advisable and worthwhile to do your homework and research the best bank for your needs. If you’re in your overdraft, you will be limited by the number of overdraft current accounts that you can choose between.

What should you look for in a new bank account?

When looking to switch accounts, it’s advisable to make sure that the interest rate and charges that you pay on your overdraft will be less than the amount that you are currently paying with your existing bank account if possible. Work out what you are paying before you start to research better options elsewhere.

The key terms and conditions that you should review when comparing your current bank account to other bank accounts are:

  • The amount of interest that you are currently paying on your overdraft
  • The amount of overdraft that you currently use each month
  • The total limit of your overdraft
  • The fees that you are currently paying on your overdraft

Once you have established these facts, it will be a lot easier for you to find a bank account with another provider that can offer you a better deal and ultimately help you to save some money.

The next step will be to work out what aspects of a current account are important to you, so that you can aim to get as many of these features included in your new bank account after you switch.

The key questions you need to ask yourself are:

  • Do you want to use a cheque book?
  • Do you want to have access to mobile banking facilities?
  • Do you like using online banking, or would you prefer to use a branch for your banking needs?

If you’re stuck, take a look at what is currently included in your bank account and work out what you like and dislike about it, which should help you narrow down what you’re after when you come to switch your bank account.

How can you find the best overdraft bank account to suit you?

One of the best ways of finding a new bank account with an overdraft is to search online. There are many resources available that can help you find the best bank account to suit the way you like to do your banking. Our current account comparison section is an ideal first port of call.

You can compare overdraft bank accounts that are available from many different high street banks and internet banking providers, with up-to-the-minute information, to help you save money on overdraft charges and fees. Just remember to read the small print before you make your switch.

Make sure that you have checked whether you are eligible to apply for a bank account with an overdraft from that provider and that you know and understand what the fees and charges are before you switch across.

How do you switch your overdraft to a new bank account?

Once you’re happy with the terms and conditions of your new bank account, you will need to find out how you can move your overdraft. The good news is that most bank accounts, including overdraft bank accounts, will come with a switching service, so you won’t be required to figure this part of the process out on your own.

During the application process, your new banking provider will likely ask you the value of your overdraft. Most banks will want to offer to match your overdraft limit on your current bank account, if you are eligible.

Remember an overdraft is a form of credit, which means a credit search will made on you by the new bank account provider.

Make sure you keep any relevant paperwork from your current bank, such as bank statements or proof of your arranged overdraft limit and bring this with you when you go into your new bank account’s local branch.

Remember an overdraft is a form of credit, which means a credit search will made on you by the new bank account provider.

What do you need to be aware of when switching bank accounts and overdrafts?

Remember, there is no guarantee that you will be able to switch to a particular account because you may not be eligible, according to the provider’s terms and conditions. Avoid any frustration by keeping a close eye on the small print during the research phase of your switch.

You might be turned down because of the amount that you are overdrawn at your current bank. Some banks are cautious about letting people switch to their overdraft current accounts if they feel that your overdrawn balance is too high or the length of time you’ve been overdrawn is too long.

Another factor that you will need to consider is the overdraft limit your new bank is prepared to offer you at the switch, as this is dependent upon your credit rating. If the bank feels that you are a poor risk, then they mightn’t be prepared to offer you an overdraft at the size you requested.

When you consider changing to a new bank account, you need to check that it can take your current overdrawn balance when you transfer across. You cannot close your old bank account until the debt has been cleared.

What are my other options?

There are other options aside from switching your bank account if you are unhappy with the amount of money you are spending on interest and overdraft charges.

Overdrafts are, after all, meant to be used as a short-term solution and unless you’re lucky enough to enjoy an interest-free overdraft, chances are that you will incur some costs in interest and bank charges.

About the author:

Caroline Ramsey is a content creator who specialises in personal finance. More than a decade of working in editorial teams, she offers highly tailored content covering a number of topics. Read more

Looking to switch bank accounts? Compare bank accounts now

If you have any feedback on this article please contact us at [email protected]