Definition
An Overdraft is a banking facility that allows you to withdraw more money from your bank account than the available balance. It works like short-term credit offered by a bank.
How It Works
Once a bank approves an overdraft limit, you can use extra funds whenever needed. Interest is charged only on the amount used, not on the full limit.
Key Features
- Helps manage urgent expenses
- Flexible repayment
- Bank decides limit based on account history
Also Read: Overdraft Loan vs Instant Loan
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