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An overdraft is like a safety net on your current account, allowing you to borrow up to a certain limit when you have run out of money. An overdraft can be very useful if you are experiencing short term cash flow problems.

Most banks offer students an interest-free, authorised overdraft when they set up a student account. On other accounts, you may have to request an overdraft facility. Your bank's decision to approve an overdraft facility will depend on your credit record. You don't have to use an authorised overdraft facility, but it is there should you need one and you can avoid extra charges if you accidentally go overdrawn.

You will have to pay back your overdraft plus any interest or charges. Rates differ between banks and it is important to check your terms and conditions carefully so you are aware of any fees and interest you may be charged.

If you go overdrawn without your banks authorisation, the charges can be high. Your bank may also refuse to pay any direct debits or cheques and charge a fee for each declined transaction. If you are experiencing short term financial problems, and have maxed out your overdraft limit, it may be possible to request a temporary extension. Talk to your bank- a temporary extension could mean a big saving in bank charges!