Overdraft vs credit card vs personal loan: which is cheaper?
FLD is not a lender or a credit broker and does not arrange credit. This is general information, not advice to borrow. Any representative APR shown is an example, not a personal quote: the rate you are offered depends on your circumstances and may be higher.
Important: This guide provides general information, not personalised financial advice. Financial products, rates and eligibility rules can change, so check the provider’s current terms before applying. You can check a firm’s details on the FCA Register.
Quick answer
For a few days, an arranged overdraft can be simple, but bank overdraft rates are high — for example TSB 39.90% representative APR and Metro Bank 34% APR typical, as of 4 October 2026. A credit card can be cheaper if you clear it within the interest-free period, and a personal loan usually costs less for larger amounts over months or years.
See also: APR Explained: A Simple Guide for UK Borrowers
The right choice depends on how much you need, for how long, and whether you can repay on time.
Side by side
| Feature | Overdraft | Credit card | Personal loan |
|---|---|---|---|
| Suits borrowing for | Days to weeks | Within the interest-free period or 0% term | Months to years |
| Cost | Often around 35%–40% APR | Varies; 0% offers may apply | Fixed rate, often lower for larger loans |
| Flexibility | Use as needed | Use as needed up to limit | Fixed amount and term |
| Credit check | For arranged overdrafts | Yes | Yes |
Overdraft examples from TSB and Metro Bank websites as of 4 October 2026. General information, not advice.
Who it’s for
- Overdraft: small, very short-term gaps
- Credit card: purchases you can clear in full, or a 0% offer you can repay in time
- Personal loan: a set amount repaid over a fixed term
Who should skip it
These are general points to weigh up, not advice. You may want to look elsewhere if:
- You can’t see how you’d repay — get free debt advice first
Full explanation
Use the calculators to compare the total cost on your numbers. For example, £500 overdrawn for 20 days at 39.9% EAR costs about £9.28 in interest.
If you’re struggling, MoneyHelper and StepChange offer free, confidential help.
The catch
Missing payments on any of these can harm your credit file. 0% card deals end, and the rate afterwards can be high.
FAQs
Is an overdraft cheaper than a credit card?
Usually not, unless you clear the card in full — card purchases can be interest-free if you repay by the due date.
When does a personal loan make sense?
For a larger, planned amount repaid over a fixed term.
Do these affect my credit score?
Applications and how you repay can affect your credit file.
Where can I get free help with debt?
MoneyHelper, StepChange and Citizens Advice.
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