An overdraft allows you to borrow money through your current account. It can be easy to think of your overdraft limit as your spending limit but it should only be used for emergencies or short term borrowing.
An arranged overdraft is an overdraft that we’ve approved for you, and you can borrow up to that limit. We’ll only charge you interest and/or fees if you actually use it. Depending on the type of current account you have, the fees and any interest-free threshold will differ.
It's a set limit we agree with you (after you've successfully applied). That limit then lets you spend more than you actually have in your current account. This might be on things like paying a bill just before pay day that you'd forgotten about.
As an example, with an Arranged Overdraft of £100 but only £50 of your own money in your current account, you could then make a payment of up to £150 because of the Arranged Overdraft.
There are no set up fees for an Arranged Overdraft, but you could be charged an Arranged Overdraft Usage Fee and interest for using an Arranged Overdraft, depending on the type of current account you have, how much of the limit you've used and how long you use it for.