If you already have an arranged overdraft with your main current account provider, you can ask for an interest-free overdraft of up to £500 for three months. Some banks are extending this to its customers automatically. If you have not got this automatically, you had until 31 October 2020 to ask for it.
This will run for three months from the date it was agreed if you asked for it. But if your account provider offered this automatically, it will run for three months from when it was first became available.
If you’re still in financial difficulties after three months, you can ask for it to be extended for another three months.
Bear in mind that when your interest-free period ends, the interest rate you’ll be charged will revert to what it was before. Typically this rate will be around 40%.
If you don’t have an overdraft, or your overdraft is less than £500, you can request an increased limit but this will be subject to normal affordability checks from your account provider.
If you have an arranged overdraft of more than £500, your provider is only required to provide it interest free up to £500, so you will pay interest on anything over this amount.
You may be able to apply for a special lower interest rate from your bank on arranged overdrafts above £500 if you are experiencing or expect to experience temporary financial difficulties because of coronavirus.
If you apply for this lower interest rate and you also have an interest-free overdraft of up to £500, you will only pay this lower interest rate on any arranged overdraft balance over £500.
The special lower interest rate offered by your bank may not be cheap and you should consider alternative forms of affordable borrowing before applying.