Advantages and Disadvantages of Increasing Your Overdraft

If you have an overdraft then you might hope that you can borrow more money. This is something that many people might think about, perhaps because there is a specific reason for wanting it because they need the money or because they feel they may need it in the future. There are advantages and disadvantages of doing this though and it is a good idea to be aware of both so that you can make the right decision.


  • Having access to more money can be extremely useful. If you need to buy something expensive or need more money to fall back on, then having a large overdraft could be handy. It could allow you to buy things that you would not normally be able to afford to.
  • It could give you peace of mind knowing that you have that money there if you need it. Sometimes we get unexpected bills or need to buy things and if we do not have money available then it can be a panic knowing how you will cope. Having the overdraft available means that we will be able to relax knowing that the money is there if we need it.
  • An overdraft can be very quick. We can withdraw money as cash or use a debit card in order to get to it really easily. With other types of loans it will take time to process them and so you will need to wait a while and this may just not be quick enough.
  • An overdraft can just tie you over until you next get paid. You can use it and then when you get paid it will be automatically paid off. This means that it is really simple to use and you can just dig into it if you need it and you do not have to worry about repaying it.
  • There is no formal repayments system, the overdraft will just be repaid when you put money into the account. This makes it really simple to repay.


  • An overdraft can be an expensive way to borrow money. If you are allowed to borrow more money then you will be paying out more in interest for it. It could be better to keep the overdraft small so that you are not paying out so much money for it.
  • Having an overdraft for some people can feel like they just have a pool of money that they can dig into. They do not think about the cost of it but just spend the money and therefore end up using it over and over again and paying out lots for it.
  • The fact that it is quick to organise means that you may just be tempted to use it instead of a cheaper loan. There are lots of different loans available but you may just feel that you cannot be bothered with those because the overdraft is so easy.
  • If you want peace of mind then it could be better to get some savings in an account instead. These can be much better as you will earn some interest on the money while it sits there and if you do spend it you will only miss out on some interest which is likely to be significantly less of a loss than the costs of an overdraft.
  • There is no pressure to repay the overdraft. This means that you can have it hanging around for a long accumulating interest. It can get really expensive and you may not even really notice because it creeps up on you.

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