Arranged overdraft - The account provider and the customer agree in advance that the customer may borrow money when there is no money left in the account. The agreement determines a maximum amount that can be borrowed, and whether fees and interest will be charged to the customer.
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.
Allowing a payment despite lack of funds: Paid transaction fee - The account provider allows a payment to be made from the customer’s account although there is not enough money in it (or it would take the customer past their arranged overdraft limit).
Reserve limit - The amount up to which we’re prepared to pay transactions above your agreed arranged overdraft limit. It provides you with more flexibility when managing your money. Beyond this point, we will refuse payments due to lack of funds. Payments above the arranged overdraft limit incur the relevant unarranged overdraft usage fees.
Unarranged overdraft - The customer borrows money when there is no money left in the account (or when the customer has gone past their arranged overdraft limit) and this has not been agreed with the account provider in advance.
Refusing a payment due to lack of funds: Unpaid transaction fee - The account provider refuses a payment from the customer’s account because there is not enough money in it (or it would take the customer past their arranged overdraft limit).