An overdraft facility is expressly agreed credit
Article 3(18) of Directive (EU) 2023/2225 defines an overdraft facility as an explicit credit agreement permitting a consumer to use funds exceeding the current balance in a current account. That contractual permission distinguishes an agreed overdraft from an overrunning, which is a tacitly accepted excess over a balance or previously agreed overdraft limit. The distinction matters because CCD2's Article 2 and dedicated Chapter VII apply different provisions to the two arrangements. A provider should identify whether an agreement authorises a limit in advance, how the limit is communicated, and what occurs when the consumer exceeds it. A product name or the duration of a negative balance is not sufficient for classification.
How CCD2 differs from the older short-overdraft rules
Directive 2008/48/EC treated some overdraft facilities differently, including agreements where credit was repayable on demand or within three months, and generally excluded overdrafts repayable within one month. The revised Directive intentionally brings overdrafts repayable within one month into its consumer-credit framework. The fact that a facility is expected to clear at the next salary payment therefore does not establish exclusion. Its legal character, scope rules and Member State implementation remain decisive. Some provisions for particular kinds of overdraft still differ from those for conventional instalment loans. Before borrowing an existing personal-loan compliance checklist, compare the Directive's overdraft provisions, including the information and servicing requirements, against the contract and national law.
Article 24 requires regular account information
Article 24(1) requires Member States to ensure that creditors give consumers account statements regularly and at least once per month throughout an overdraft agreement. Those statements must appear on paper or another durable medium specified in the agreement and include the relevant statement period, drawdowns, previous and new balances, payments, borrowing rate, charges and any required minimum payment. The obligation concerns continuing transparency rather than only the point of approval. A banking application showing a live balance may help consumers, but a firm should not assume that this screen alone meets the legal meaning of a statement on a durable medium. Review the required statement contents and the method and evidence of delivery.
Rate changes and protection when limits change
Article 24(2) deals with notifying consumers in good time before increases to an overdraft borrowing rate or applicable charges, while providing a defined periodic-information route for changes linked to a publicly available reference rate where the required conditions are met. Article 24(3) requires advance notice, generally at least 30 days, of reduction or cancellation of an overdraft facility. Article 24(4) provides that, before enforcement, consumers must be offered a no-additional-cost route to repay amounts affected by reduction or cancellation in 12 equal monthly instalments, unless they choose earlier repayment, at the applicable overdraft borrowing rate. These details warrant distinct servicing controls. National measures and any permitted stricter protections also require review.
Creditworthiness, pre-contract duties and product-specific rules
An overdraft facility can involve advertising, pre-contract information, creditworthiness and agreement duties as well as later account management. However, it is not safe to state that every requirement applies in the same manner as for a fixed-term personal loan. CCD2 contains specific provisions and derogations relevant to overdrafts and related account products. The creditor should identify the rules applicable to the actual facility and the consumer rather than rely on the account's marketing name. Assessment of a higher limit, changes in interest and an agreement continuing indefinitely each present separate questions. Document which legal entity grants the overdraft and which regulated intermediary or outsourced provider carries out customer-facing steps, preserving responsibility for the correct law.
Existing open-end facilities at the November 2026 cutover
Under Articles 47 and 48, national measures implementing CCD2 must apply from 20 November 2026. Article 47 preserves Directive 2008/48/EC for agreements already existing at the cutover until termination, but applies selected CCD2 provisions to existing open-end agreements. Those include Articles 23 and 24, the second sentence of Article 25(1), Article 25(2), and Articles 28 and 39. An existing overdraft may therefore need specific continuing-account updates without every new-agreement provision becoming applicable to its original formation. Classification as an open-end credit agreement and the operative national provisions need careful review. Create separate populations for newly concluded facilities and accounts that predate the transition.
How to test an overdraft journey
A practical compliance test starts with the current-account agreement, whether an overdraft is explicitly agreed, credit limit, borrowing rate, charges and expected repayment conditions. Match these details to the relevant national scope rules and Article 24 obligations. Inspect statement generation, durable-medium delivery, interest-rate notices, reduction and cancellation communications, repayment scheduling and exceptional cases. Include situations where a limit is cut while the account is drawn down, an account exceeds its agreed limit, or a variable reference rate changes. Save product versions, legal-source references, sample notices and completed test results. Reassess after changing repayment terms, pricing, national law, distribution channels or the legal entity responsible for the credit.
Frequently asked questions
Does the product label settle whether CCD2 applies?
No. Article 2 and Article 3 definitions, the agreement's legal terms, and national implementing law determine treatment.
When do CCD2 national measures apply?
Member States are required to apply their implementing measures from 20 November 2026, subject to Article 47 transitions.
Can requirements differ for similar financial products?
Yes. Explicit overdrafts, tacit overrunning and leasing with or without purchase rights have different scope rules.
Primary sources
Directive (EU) 2023/2225, EUR-Lex ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.