What is overdraw and how to avoid it?

Overdrawing your NAB personal transaction or savings account is when you exceed the available funds in your account and have a ‘debit balance’; a balance of less than zero. A ‘credit balance’ is when you have an account balance of more than zero.

If you don’t have enough funds to cover a transaction, the transaction may be declined. Other times, we may allow the transaction to overdraw your account beyond your available balance or an approved overdraft limit (if you already have one).

Reasons to avoid overdrawing your account

There are some consequences of overdrawing your account that you need to be aware of.

• You’ll be charged debit interest on the overdrawn amount each day until you return your account to a zero or credit balance.
• An account that is overdrawn for more than 60 days may be reported to the credit reporting body and this may affect your credit score and your ability to get credit in the future.

What is debit interest and what rate applies?

Debit interest is the interest we charge if your account is overdrawn. You can find our debit interest rates on our Indicator Rates – Deposit Products page or on request.

How debit interest is calculated and charged

We take the annual debit interest rate, and divide it by 365 (including in a leap year), and multiply it by the overdrawn amount (debit balance) of your account at the end of each day, up to and including the second last banking day of each month.

The debit interest is the total amount of all the daily accrued debit interest for the period your account was overdrawn.

Any transactions made on non-banking days are treated as having been made on the next banking day.

We’ll charge debit interest to your account on the last banking day of each month.

What to do if you accidentally overdraw your account

To avoid debit interest, and your account going further into debit, make sure you top up your account to repay the overdrawn amount on the same day your account overdraws. To help you monitor your account balance more easily, consider setting up NAB Alerts.

How to avoid overdrawing your account

• Check your account balance regularly. Remember that your balance can take a while to update after some transactions, like withdrawals on non-NAB ATMs or purchases made on weekends. You can track tour income and expenses using online banking.
• Know when direct debits or recurring payments are due from your account. It can help to time them just after your pay is deposited into your account.
• If you write cheques, make sure you have the funds to cover every cheque you write, and watch your balance to see when it's presented.
• If you receive cheques, wait for them to clear before you spend the funds. This can take a few days after you bank the cheque.
• If you don’t already have one, create a budget so you know exactly what’s coming in and going out of your account.
• If you’re struggling to make ends meet and need some professional guidance, reach out to a financial counsellor through the National Debt Helpline, opens in new window.

Concession cardholders can ask to prevent overdrawing

If you have a current Commonwealth Seniors Health Card, Health Care Card or Pensioner Concession Card, you can ask us to prevent your account from being overdrawn on a NAB Classic Banking or NAB Retirement account. However, there may be instances where we’re unable to prevent your account from being overdrawn – for example, if a merchant processes a recurring payment or direct debit. You won’t be charged any debit interest.