A Monzo overdraft is an arranged limit that lets your balance go below £0, and Monzo charges interest on the amount you're overdrawn, at a rate set by your credit score. You can check whether you're eligible in the app without affecting your credit score, but switching one on leaves a hard footprint on your credit file.
That second point is the one to know before you tap anything. Monzo runs a soft search when you open your account, which shows on your credit report as a quotation search or administration review and can't be seen by other lenders. Switching the overdraft on is different: Monzo tells the credit reference agencies, it records a credit application search, and that can affect your score.
How Monzo decides what to offer
Monzo looks at its own data plus information from three credit reference agencies: TransUnion, Equifax and Experian. If you're eligible, you can switch the overdraft on when you sign up or apply later, and you choose your own limit up to the amount Monzo offers. Monzo reviews eligibility every month, so an offer can change over time.
- Tap the Home icon in the menu bar.
- Tap your profile picture.
- Scroll down to Your personal account.
- Tap Learn about overdrafts if you're not eligible, Set up an overdraft if you are, or Manage your overdraft if you already have one.
The eligibility screen shows the limit you could get and the rate before you commit.
Interest: when and how it's charged
| Question | Monzo's answer, as of October 2026 |
|---|---|
| What's charged on an arranged overdraft | Interest on the amount you're overdrawn |
| What sets your rate | Your credit score, which places you on one of three effective annual rates |
| Where to see your rate | The overdraft section of the app |
| When interest leaves your account | On the first of every month |
| How it builds | Applied at midnight UTC on the day each payment settles, shown in a feed item pinned to your Home tab |
| Charges on an unarranged overdraft | None, and none for payments Monzo rejects |
UTC is Coordinated Universal Time. It's the same as GMT but ignores the UK clocks going forward in spring. Monzo also has a calculator that shows what you'd pay for a given amount and time.
Changing or switching off your limit
- Tap Home in the app's menu bar.
- Tap the account you need.
- Tap Manage overdraft and choose a new limit, or switch it off.
Two rules apply. You can't set a limit above your maximum, and you can't set one below the amount you're already using. When you ask for more, Monzo checks your credit file again to see what's changed and may offer more or less. If a higher limit doesn't show in the app, Monzo can't increase it right now.
Unarranged overdrafts: going below £0 without one
Even without an overdraft, your balance can dip below £0. Monzo tries to reject payments that would take you under zero, but it can't stop these:
- Offline payments, such as Transport for London and in-flight purchases.
- Payments that use a pre-authorisation, like car hire and hotels.
- Your monthly Monzo Plus, Premium or Max subscription during its minimum term.
- Taking back an upfront dispute refund when there isn't enough evidence to uphold your claim.
- Your first Monzo Flex payment, if you bought on your virtual card without choosing how many months to pay over.
Monzo doesn't charge interest or fees for an unarranged overdraft, or for payments it rejects.
How your overdraft shows on your credit file
Checking eligibility doesn't touch your score. Switching an overdraft on leaves the hard footprint described above, and each agency weighs that search in its own way. How you use it matters too: Monzo says going over your agreed limit, or going a long time without adding funds to your account, can count against your score, again depending on how each agency calculates it.
Monzo's help also covers separate products with their own rules: overdrafts on Monzo Business, emergency overdrafts and limited company overdrafts, which have their own interest, renewal and switch-off pages.
What Monzo itself says to watch
Monzo describes an overdraft as something to tide you over now and again, not a long-term arrangement, because staying in it too long can get expensive. If you're struggling to repay, it asks you to get in touch, and its help centre has pages on using your overdraft less and on what to do if you can't afford to repay after losing your job.
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My verdict on the Monzo overdraft
I'd read the eligibility screen before anything else, because it shows your limit and rate without any mark on your credit file, and only switching it on leaves a footprint. The details I'd keep in mind are the ones Monzo spells out itself: interest lands on the first of the month, the rate depends on your score, and it's built as a short-term buffer. If you're weighing up where to bank, here's how Revolut and Monzo compare, and if you're self-employed, my guide to the best business bank account for sole traders.
Frequently asked questions
Does checking for a Monzo overdraft affect my credit score?
No. Checking your eligibility doesn't impact your credit score. Switching an overdraft on creates a hard footprint, which can.
When does Monzo take overdraft interest?
The interest will come out of your account on the first of every month. It's applied at midnight UTC on the day each payment settles.
Does Monzo charge for an unarranged overdraft?
No. Monzo doesn't charge interest or fees when you're in an unarranged overdraft, or for payments it rejects.
Why can't I increase my Monzo overdraft?
If you can't see a higher limit in your app, Monzo can't increase it right now. It reviews eligibility every month, so that can change.
What is an unarranged overdraft at Monzo?
It's when your balance goes below £0 without an arranged overdraft, for example through offline payments like Transport for London or pre-authorisations like car hire and hotels.
Which credit reference agencies does Monzo use for overdrafts?
Monzo looks at its own data plus information from TransUnion, Equifax and Experian.
Can I switch off my Monzo overdraft?
Yes. Tap Home, tap the account, then Manage overdraft, where you can change your limit or switch it off, as long as you're not using more than the new limit.
