Problem overdraft? How to ask your bank for a refund of interest

Have you had big overdraft problems for a long period?

You can make an affordability complaint and ask for a refund of overdraft charges if:

• your overdraft limit was set too high at the start or increased to a level you are unable to clear; or
• your overdraft usage showed you were in long-term financial distress. For example, being in the overdraft all the time, or using an unauthorised overdraft a lot
• your overdraft was originally a student account with no charges, but now interest is being added and you are in the account all or almost all of every month.

This article shows how to make an affordability complaint to your bank, with a free template letter to use. If the bank doesn’t make you a good offer, it is free to take your case to the Ombudsman.

Worried about your credit record? See these FAQs on affordability complaints.

 

Overdraft affordability complaints

Overdrafts are supposed to be for short-term borrowing

Overdrafts are meant for short-term problems, not as long-term borrowing. A bank should review a customer’s overdraft usage and limit and if there are signs of financial difficulty, offer help.

One sign of financial difficulty is hardcore borrowing for a long period. The Lending Code defined hardcore borrowings as “the position where a customer’s current account overdraft remains persistently overdrawn for more than a month without returning to credit during that period”. 

Some Ombudsman decisions

All cases are very individual.  But these examples give you an indication of what the Ombudsman thinks is important.

In this NatWest decision, the Ombudsman decided:

NatWest did have an obligation to monitor Miss K’s use of her overdraft facility.

Any fair and reasonable monitoring of Miss K’s overdraft facility would have resulted in NatWest being aware Miss K was in financial difficulty … by October 2014 at the absolute latest. So NatWest ought to have exercised forbearance from this point onwards.

In this Santander case, the bank didn’t notice hardcore borrowing:

By this point, Miss C was hardcore borrowing. In other, words she hadn’t seen or maintained a credit balance for an extended period of time. Santander’s own literature suggests that overdrafts are for unforeseen emergency borrowing not prolonged day-to-day expenditure. So I think that Miss C’s overdraft usage should have prompted Santander to have realised that Miss C wasn’t using her overdraft as intended and shouldn’t have continued offering it on the same terms.

What points will help your complaint

Are you in the overdraft all, or almost all, of the month for a long while?

This is the most common reason for winning a complaint

Overdrafts are meant to be used for short-term difficulties. Using all of the overdraft for a few months is fine. Or for a few days at the end of a month before you are paid.

Banks should review your overdraft annually. This is in most overdraft terms and conditions. And even if it isn’t, the Ombudsman says this is good industry practice.

So at one of these reviews, your bank should have seen you were in difficulty with the overdraft. For example if you are in the overdraft for all (or almost all) of the month for a prolonged period. Or if you were often exceeding your arranged overdraft limit.

I would say over 2 years is prolonged borrowing, not short term. If you have only been in the overdraft for a few months and can’t manage, ask your bank for help, don’t make an affordability complaint you won’t win.

Did the bank set your limit too high?

This may have been from the start when you were first given an overdraft.  Or the initial low limit may have been fine, then the bank increased it to a level which it was impossible to repay.

If the bank saw signs of financial difficulty, it should not have increased your credit limit, even if you asked for it. And it should have considered offering your help instead (the regulator’s word is forbearance), for example by stopping charges.

But what is too high?

This depends on your income and expenses. An overdraft of £2,000 for someone whose income is £1,800 a month is a lot –  but if you earn £5,000 a month, then a £2,000 overdraft may be reasonable.

Any other reasons?

You won’t win an affordability complaint by saying the charges were too high.

Instead, you say the bank should have known they were unaffordable for you because of all the financial problems it could see on your statements and your credit record.

Any of the following problems are points your bank should have noticed if you were using your overdraft a lot:

• having direct debits or standing orders not being paid;
• a lot of gambling showing on your statements;
• significantly increasing other debts with the same bank (you may also be able to complain about those loans or credit cards);
• being recently rejected for a loan or a credit card by the bank;
• significantly increasing debts with other lenders showing on your credit record;
• a worsening credit record – maxed out credit cards, new missed payments, payment arrangements, defaults etc;
• using payday loans;
• mortgage arrears;
• a reduction in the income going into your account.

Making your complaint

What you need at the start

You don’t need to know the dates your limit was increased before complaining – my template asks for them.

You don’t need to send statements to the bank with your complaint – the bank already has them!

Your current credit record shows what was happening in the last six years, so download your credit report now and keep it. The sooner you get that report, the further back it goes. I suggest you get your free TransUnion statutory credit report.

Send a complaint by email

I don’t recommend starting a complaint on the phone. It’s too complicated and you will be talking to someone that doesn’t specialise in these complaints.

Email is the simplest way to make these complaints. Here is my list of bank email addresses for complaints.

An alternative is to send a long message in the app. But if this means using a chat facility, it’s not usually a good idea, as you are again talking to someone who doesn’t understand what you are saying and tries to tell you what help is available with your overdraft – when all you want is to have your complaint considered.

A template you can adapt

In the template below, I’ve invented some examples and dates so you can see how a complaint email could read. The bits in italics should be changed or deleted to tell your story. Delete dates if you don’t know them. If a sentence doesn’t sound relevant, delete it.

Important points to note

Free student overdrafts

You can only win a complaint about these after the bank has started charging you interest. If you are still in the interest-free period, or only just outside it, you won’t win an affordability complaint and there is no point in complaining yet.

But once the bank has started charging interest, they should start doing annual reviews and then notice if you are in difficulty.

You can complain if the account is still being used or if it is closed

These complaints can be made if:

• you are still using the account or you have stopped using the bank account but it’s still open and you are being charged for the overdraft;
• the account is now closed but it has been open in the last 6 years;
• the bank defaulted it less than 6 years ago and sold it to a debt collector (here you still complain to the bank, not the debt collector).  If the debt collector has gone to court and got a CCJ, add a sentence to the template saying you want the CCJ removed as part of the settlement of your complaint.

But if you have had an IVA or bankruptcy after these problems, or if you are in a DRO, then you shouldn’t complain – ask in the comments below for details.

Old accounts

Banks may say FOS won’t look at an old complaint, but this isn’t right.

FOS will normally look at a complaint if the bank account has been open in the last six years.

Open and recently closed accounts aren’t a problem – the bank will still have your statements.

If your complaint is about an account that was closed more than 6 years ago, you are not going to win this.

How much may you get back?

FOS can decide to go back more than 6 years, but much the most common FOS decision at the moment is that there should be a refund for only the last 6 years.

A refund for the last 6 years will normally clear your overdraft. In many cases a refund for 4 years or even less may clear the overdraft. Look at how much you are charged a month and multiply that by 48 to see if a 4 year refund will clear it.

It is very, very unlikely you will get a refund going back to 2009, so keep your expectations reasonable.

Packaged bank accounts and business accounts

These affordability complaints are not about the fees on packaged bank accounts. MSE has a page about packaged bank account charge complaints.

The complaints covered here relate to personal accounts. For business accounts, talk to Business Debtline about your options.

The Bank replies

They want to phone me!

People are often scared if they get this message. But it may be good news! You can just ignore it or say you would like a reply in writing.

If you decide to take the call, it helps to be prepared:

• have a pen and paper handy so you can write down anything
• if they say they are partially upholding the complaint, ask them the date they are refunding the fees from, and how much. And say you would like to see this in writing before you decide whether to accept it.
• if they ask you questions that sound complicated or worrying, ask them to put the questions in writing as you find the phone difficult
• when they say they are rejecting the complaint, ask for this in writing, as you will be going to the Ombudsman.

Rejection/poor offer – go to the Ombudsman , it’s free

Banks reject many good complaints, hoping you will give up. So don’t! You know if the overdraft has caused you a lot of problems.

You can’t go straight to the Financial Ombudsman (FOS), you have to wait for the bank to reply, or for them to have not replied within 8 weeks.

Here are some things banks may say to try to put you off going to FOS:

• you could have declined the increase to your overdraft limit – FOS probably won’t think that is a good reason
• you never let the bank know you were in difficulty – FOS probably won’t think that is a good reason
• your salary was enough to return you to credit each month – this is misleading if bills meant you went into the overdraft in a few days;
• FOS will not look into things that happened more than 6 years ago – if your account was still open in the last 6 years FOS may well look at it.

And the bank may offer to refund fees for the last 2 years say, even though your problems have been large for many more years. Think twice about accepting a low offer – you won’t put this offer at risk by going to the Ombudsman.

If you are offered a refund for the last 6 years but not any further back, think seriously about just accepting it. Although it is possible for the ombudsman to award a refund going back further than 6 years, this is very unusual.

If you aren’t sure, post in the comments below.

To send the case to FOS, use this online form:

• you can use what you put in your complaint to the bank;
• if the bank rejected your complaint or made a low offer, say why you think this is unfair;
• use normal English, not legal terms.

You don’t need to send your bank statements – the bank will send those to FOS. And you don’t need the policy documents for your bank account, the lender will supply those to FOS if they are needed.

Do these complaints work?

Yes! In 2026, some banks are making more offers directly.

A Guardian article featured a case where someone used the template letter here. Barclays denied it had done anything but made an £8,000 “goodwill” payment to the customer.

And if your bank rejects your case, people are winning cases at the ombudsman. FOS is a friendly service although it isn’t speedy. It isn’t faster to use a solicitor or a claims firm,

The comments below this article are from other people who have made this sort of complaint. That is a good place to ask for help if you aren’t sure what to do.

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