Everything You Need To Know About Barclays Bank Overdraft

Updated: January 2022

It’s hard to imagine that over a year after the pandemic began, many people continue to live without secure income sources or regular employment. For this reason it’s now even more important to know your options with regards to financial flexibility. The modern day overdraft in the U.K. can be useful as a form of short-term borrowing when cash flow is short. Used responsibility, it can act as a financial safety-net to tide you over until your next paycheck arrives.

Barclays Bank is extremely well known as the second-most valuable bank brand in the U.K. trailing only behind HSBC, according to Statista. With over 24 million global customers and 30,000 employees, Barclays focuses on developing meaningful long-term relationships with its banking customers, according to their CEO Ashok Vaswani.

In this post we will cover everything you need to know about a Barclays overdraft.

Unarranged vs. Arranged Overdrafts at Barclays

To be clear, overdrafts are an extension of credit on your current account and there are two types: an arranged overdraft and an unarranged overdraft. An arranged overdraft is where you and your bank agree on the limit and interest rate in advance. An unarranged overdraft is an overdraft that you have not agreed upon in advance with your bank. This happens when you become ‘overdrawn,’ or have spent more money than you have in your account.

Unarranged Barclays Overdraft Overview:

Barclays does not offer unarranged overdrafts for their account holders. If there isn’t enough money in your account, the bank will always try and return the payment. This means that the bank will likely decline charges if you have insufficient funds.

Barclays does understand that everyone slips up from time to time, so they won’t charge you interest if you overdraw by £15 or less on some accounts.

Arranged Barclays Overdraft Overview:

Barclays does offer arranged overdrafts for most banking customers, the terms of which must be agreed upon in advance. Arranged overdrafts provide a flexible line of credit that you may access when spending more money than what is in your account. Interest rates for Barclays arranged overdrafts are calculated using a 35.0% annual percentage rate (APR) Representative (variable). APR shows the cost of borrowing over the course of a year.

Customers are also able to request an increase in their arranged overdraft limit. Barclays just requires payslips from the previous two months as well as a statement from the account into which your income is deposited -- if it’s not a Barclays account.

Barclays provides two important online resources for those interested in learning more about their arranged overdrafts:

• Arranged Overdraft Interest Calculator - See the costs for using an arranged overdraft
• Overdraft Eligibility Checker - Do you qualify for arranged overdraft protection?

Barclays Overdraft Charges in 2021

Barclays’ overdraft charges for 2021 are actually very simple: a flat annual interest rate of 35.0% (variable). We feel obligated to mention that this is an extremely high interest rate.

Make sure to use the Overdraft Interest Calculator on Barclays’ website to compare interest rates to other interest-free loan options.

In the summer of 2019, the Financial Conduct Authority (FCA) announced additional reforms and regulations to fix what they referred to as “a dysfunctional overdraft market.” Long story short, an FCA investigation found that high unarranged overdraft fees were causing harm to the U.K.’s most financially vulnerable. 

Read, ‘The Ultimate Guide to Overdrafts in 2020’ to learn more about what dipping into an overdraft really means.‍

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Barclays £15 Interest Free Buffer

As mentioned above, Barclays still has an interest-free buffer on some  accounts. A £15 buffer applies to student and graduate accounts, a £100 interest-free buffer appears on Barclays Bank Account with Overdraft Tier accounts (dependant on eligibility), and £500 on the Premier Current Account. There are no buffers on executive accounts and Personal Overdraft accounts. Customers will pay 35% annual interest on all arranged overdraft charges beyond the specified interest-free buffer.

We recommend speaking directly with banking representatives when researching interest-free overdraft options, as things do change quite often. 

Barclays Overdraft During Coronavirus

Barclays has announced a number of emergency overdraft safety nets due to the coronavirus (COVID-19) pandemic. Until 21 September 2021, Barclays is capping overdraft interest charges on personal accounts at £180 per month. The bank is also emphasizing their Barclayloan debt refinancing option for those who qualify. Lastly, you may be eligible for reduced or waived overdraft interest charges or payment plan options - call 0800 161 5234 to find out.

Managing your debt during COVID-19 continues to be a widely discussed topic as we monitor how the labor market responds to the ever-evolving crisis.

Barclays Bank Overdraft Benefits

1. Access up to the agreed limit in your chosen currency.
2. Won’t charge interest if overdrawn by certain amounts on some accounts.
3. Will attempt to return payment to avoid going into an unarranged overdraft.
4. Offers a free session with their Barclays Money Mentors.
5. Emergency overdraft safety nets are available due to COVID-19.

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