line of credit

Personal Overdrafts

Say goodbye to overdraft fees with a personal overdraft.

An overdraft can be a convenient option if your account occasionally slips into the red, or if you're after credit to use as and when you need it. Personal overdrafts are a line of credit that you can add to an everyday transaction account. Once you exhaust your available funds you'll be able to access an additional credit limit.

Find out how these accounts work in our guide below.

How does a personal overdraft work?

Personal overdrafts are a type of credit attached to an everyday transaction account. You'll be approved for a set limit and be able to draw funds up to and including that limit whenever you need it. Your overdraft funds will only be accessed when the other funds in your account have been exhausted.

You may have to pay a fee to set up your overdraft and you'll pay interest on the amount you use. Once you put money back into your account you'll be able to access the total amount of your overdraft again.

Personal overdraft vs personal loan: Which is right for you?

Personal overdraftPersonal loan
How does it work?A line of credit you can access when the funds in your transaction account run out.You apply for a certain amount of money and repay it over a set period.
Benefits
  • Only pay interest for the credit you use
  • Flexible repayments
  • Use just as much of the credit limit you need
  • Know how much you will have to repay each month and when you will be out of debt
  • A good option if you are borrowing for a specific purpose
Drawbacks
  • Monthly fees apply regardless of whether you use it or not
  • You need to use all the funds in your transaction account to access your overdraft
  • You have to apply for a specific amount of money for a set purpose
  • The loan may have restrictions on how you repay it

How do I find the best personal overdraft account for me?

As with any financial choice you make, you should compare personal overdrafts in order to get the best deal possible. You’ll also want to pick the best loan for your personal financial situation.

  • Do you already have an account with the lender? You will need to have a transaction account with the provider to get a personal overdraft. If you don't have an account already you will need to set one up, so you'll need to take this into account.
  • How much will it cost? Fees to look out for include upfront fees such as establishment fees and ongoing fees in the form of monthly or annual fees.
  • What interest rate will you be charged? Since a personal overdraft is an unsecured loan, variable interest rates generally apply. Most banks only ask that you pay interest on the money you use, but you’ll still want to find the best interest rate available.
  • Minimum requirements. Some lenders may set a minimum requirement for how much your personal overdraft loan should be. Compare your options so you don't take out a higher credit limit than you need.
  • Application process. If you’re the type of person that is looking for a simple enrolment process you’ll want to examine all of your options to find the simplest one for you.

Compare personal lines of credit

We don't have any personal overdrafts available for comparison, but you can compare a range of line of credit products in the table below.

Rates last updated April 24th, 2018
Name Product Interest Rate (p.a.) Min Loan Amount Max. Loan Amount Application Fee Product Description
Westpac Flexi Loan
From 14.99% (variable)
$4,000
$50,000
$150
Benefit from convenient access to an ongoing line of credit. Interest only applies to the funds you use.
St.George Get Set Loan Personal Loan
From 17% (variable)
$5,000
$50,000
$150
A revolving line of credit that lets you access your funds as and when you need to. No set repayment terms and no loan expiry.
Bank of Melbourne Get Set Loan - Line of Credit
17% (variable)
$5,000
$50,000
$150
Apply for up to $50,000 and access it as a convenient line of credit.
Citi Ready Credit
From 7.9% (variable)
$5,000
$75,000
$149
Apply for up to $75,000 as a convenient line of credit. 7.9% p.a. rate on initial balance transferred available to all approved applicants. After 2 years a revert rate of 19.99% p.a. applies.

Compare up to 4 providers

Weigh up the benefits and drawbacks before you apply

  • You can avoid overdrawn account fees. If you find your account dipping into the red too often, an overdraft account will safeguard you against overdrawn account fees (up to your overdraft credit limit).
  • 24-hour access. With most personal overdrafts you'll have 24-hour access to your account, and most providers will give you a debit card for convenient spending and ATM withdrawals
  • You only pay for what you use. You’re only charged interest for what you’re using, helping you to save.
  • The account comes with interest. Like any unsecured loan, personal overdrafts come with interest rates. These rates will vary from lender to lender so it’s important to compare your options to get the best deal.
  • Fees and charges can vary. There are also fees and charges attached to personal overdrafts. This can be anything from enrolment fees to account-keeping fees.

Is there anything you should avoid?

  • Overusing the account. Sometimes people overuse their personal overdrafts just because it's conveniently attached to their transaction account. If you apply for and get a personal overdraft you should make sure you only use it when it’s necessary. Most personal overdrafts just charge interest on the money you use, so make sure to use only what you need to save yourself interest payments.
  • Taking the first loan you see. Make sure to compare personal overdrafts based on the applied fees and charges, interest rates, and any lender requirements, in order to get the best deal that suits your personal situation.

How you can apply for a personal overdraft

Once you've compared the personal overdrafts available you can start the application process. Each bank or lender will have its own application process and eligibility criteria.

Generally, to open a personal overdraft you must be an Australian citizen or permanent resident with a valid Australian address. You must also be 18 or older and pass a credit evaluation to determine if you can afford the loan. That means the lender may require information regarding your employment and income as well as personal assets.

Have more questions about personal overdrafts?

How small of an overdraft can I apply for?

Most banks offer personal overdrafts starting at $100.

Can't I just keep overdrawing my account?

Overdrawing your account regularly is not a good idea. You will be charged an overdraft fee each time this happens. Also, lenders may request copies of your bank statements when you apply for a loan and the overdrafts will be listed. This will affect your ability to be approved for the loan.

Should I just get an overdraft from my current bank?

This can be a convenient option to consider because you need to have a transaction account to attach the personal overdraft too. However, when you compare your options you might find that your bank charges high fees or interest with its personal overdraft. Opening a transaction account is relatively simple and you have the option of holding multiple accounts so you can take advantage of offers from other banks.


Picture: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Personal Loan Offers

Important Information*
NAB Personal Loan Unsecured Fixed

An unsecured personal loan with a competitive fixed rate that you can make additional repayments to without penalty.

SocietyOne Unsecured Personal Loan

Based on your risk profile, you will receive a tailored rate between 7.5% and 20.49% with a SocietyOne personal loan.

Westpac Unsecured Personal Loan

Borrow up to $50,000 for a term of up to 7 years with this unsecured loan.

Pepper Money Unsecured Fixed Rate Personal Loan

Apply for up to $50,000 and receive conditional approval within minutes. Interest rates range from 9.99% p.a. to 21.74% p.a. The rate you are approved for depends on individual circumstances.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

10 Responses

  1. Default Gravatar
    July 28, 2017

    Can I get an over drafting account with the Suncorp bank if im on Newstart ??

    • Staff
      LiezlJuly 31, 2017Staff

      Hi Steven,

      Thanks for your question.

      While I’m unable to say whether you’ll be eligible or not, you may check the eligibility criteria for Suncorp Everyday Essentials Account, which has an overdraft facility, on this page. In case you’re unsure of your eligibility, please contact them directly to enquire.

      Cheers,
      Liezl

  2. Default Gravatar
    JasonMay 24, 2017

    Hi i’m just wondering could I get personal overdraft with nab I just recently paid out debt agreement part 9.

    • Staff
      LouMay 25, 2017Staff

      Hi Jason,

      Thanks for your question.

      Kindly note that to apply for a NAB Personal Overdraft, you must already hold a NAB Classic Banking, Retirement, Investment Cash Manager or Gold Banking — Private account. Other eligibility criteria apply. You may have to directly contact NAB to discuss your eligibility.

      Alternatively, if you have just been discharged from Part 9 Debt Agreement, you may compare loan options here.

      Cheers,
      Anndy

  3. Default Gravatar
    March 2, 2017

    Hello I am on centrelink single parent pension would I be eligible for nab’s $500 overdraft?

    • Staff
      LouMarch 2, 2017Staff

      Hi Naomie,

      Thanks for your question.

      NAB accepts applicants who are receiving Centrelink payments. They are handled on a case-to-case basis. Usually, strict criteria applies.

      You may also visit this page to check other lenders that may consider you for a loan.

      Cheers,
      Anndy

  4. Default Gravatar
    SandraSeptember 16, 2016

    I’m on a Centerlink disability pension, can I apply for a bendigo bank overdraft of 500.00 please,

    • Staff
      ElizabethSeptember 20, 2016Staff

      Hi Sandra,

      Bendigo Bank accept Centrelink benefits as income so you can consider applying for an overdraft through them. Your income and financial situation will be taken into account when they’re approving the overdraft.

      Hope this helps,

      Elizabeth

  5. Default Gravatar
    reneeSeptember 8, 2016

    i don’t have enough $$ available for a redraw on my personal loan, if i transfer the difference from my complete freedom account to my personal loan will i be able to redraw then?

    • Staff
      ElizabethSeptember 8, 2016Staff

      Hi Renee,

      As long as you make some sort of additional repayment to your personal loan you will be able to redraw that amount (providing your personal loan offers this).

      Hope this helps,

      Elizabeth

Ask a question
Go to site