What is the EAR overdraft rate?

EAR is short for equivalent annual rate, which is the interest rate you are charged if you go overdrawn on your current account.

EAR is a representative interest rate that shows the rate you would pay if you remained overdrawn for a year. It is determined by:

• The simple rate of interest you are charged if you go overdrawn;
• The frequency with which interest is charged; and
• The effect of compound interest on your debt.

Bear in mind that the equivalent annual rate doesn't take into account any other account fees, which you may also be charged, such as an account fee.

However, all overdraft providers must not also publish an Annual Percentage Rate (APR) which does include some other fees. You can now use the APR to compare overdraft rates more fully. You will see an APR on all advertising for current accounts, including websites.