Arranged overdraft - a formally agreed limit before you use it.
Buffer - a small additional amount over and above your arranged overdraft limit, to allow for transactions to be made without taking you into an unarranged overdraft.
Cap - the maximum amount of charges you can incur in a calendar or statement month.
EAR - Equivalent Annual Rate is the cost of an overdraft stated as a yearly rate, taking into account the compounding of interest. You can use it to compare rates offered by different providers. We work out interest each day on any overdrawn amount and take it from your account monthly, giving you 28 days’ notice of the amount. Any interest charged is added to the balance outstanding.
Paid transaction - if a transaction is attempted that takes you over your arranged overdraft limit, but is within your reserve limit, it’s paid (which means you use an unarranged overdraft).
Reserve limit - the amount up to which we’re prepared to pay transactions above your agreed overdraft limit. It provides you with more flexibility when managing your money. Beyond this point transactions are returned unpaid. Payments above the arranged overdraft limit incur the relevant unarranged overdraft usage fees.
Unarranged overdraft - where you borrow over an agreed limit, up to any reserve limit we set on your account.
Unpaid transaction - if a transaction is attempted that takes you over your reserve limit, (even if your account is in credit at the time the transaction is attempted), it is returned unpaid (bounced).