Overdraft Cap

Overdraft Cap

The maximum amount of money that a bank will request from another bank on a business day. This limits the first bank's exposure to the risk that too many transactions will result in overdrafts (which means the second bank may refuse to pay the first bank). Each bank has a different overdraft cap, determined by its risk adjusted capital.
References in periodicals archive ?
Here's hoping that rates rise before the CFPB proposes and finalizes an overdraft cap so credit unions can recover the revenue from interest income.
It seems that the crux of the dilemma Everton must contend with now is not just that they have impatient bankers, a crippling overdraft cap, and little assets other than their players.
Fedwire adopts the other two risk- management measures, the intraday overdraft cap and the interest charge.