overdraft


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Related to overdraft: Overdraft Facility

Overdraft

Provision of instant credit by a lending institution.

Overdraft

A situation in which a bank customer withdraws more from his/her account than he/she had previously deposited. For example, if an account holder has $1,000 in the account and withdraws $1,200, this is an overdraft of $200. The bank may or may not honor the overdraft, depending on its policies and the importance of the customer. Usually, however, an overdraft incurs a relatively steep penalty fee.

overdraft

A draft for more than the balance in the account on which the draft is drawn. A bank may honor an overdraft, depending on the importance of the customer and on prior arrangements (if any) to cover overdrafts. See also NSF check.

Overdraft.

An overdraft is a withdrawal from a bank account that exceeds the funds you have available.

If you overdraw your account and you have overdraft protection, the bank will transfer money up to the limit on your line of credit to your account to cover the withdrawal. Although you will pay interest on the amount the bank transfers to your account from your line of credit, it is likely to be less than the substantial fees you pay for each overdraft.

overdraft

a financial facility for advancing MONEY to an individual or business (the borrower) by a COMMERCIAL BANK, SAVINGS BANK etc. (the lender). An overdraft is a form of CREDIT which allows the borrower to withdraw as much money as required up to a prearranged total limit, whereupon interest is charged at a rate related to the base rate of interest on outstanding balances (see INTEREST RATE). In the case of businesses, overdraft facilities are often provided on an indefinite basis, thus providing the borrower with a continuous line of credit used mainly to finance WORKING CAPITAL requirements. See BANK LOAN.

overdraft

see BANK LOAN.
References in periodicals archive ?
Fixed fees for borrowing through an overdraft will also be banned - also helping to make the overall costs easier to understand and compare with other providers.
Despite its mission to serve low-income and underserved communities, Southern Bancorp charges overdraft fees to as many businesses as it does to individuals, CEO Darren Williams said.
The regulator is not proposing to cap overdraft prices but it will actively monitor developments.
Under a raft of measures, fixed fees for overdrafts will also be banned and replaced with a single interest rate.
It said the cost differences of providing the two overdrafts did not justify the "much higher prices" for unarranged overdrafts.
StepChange head of policy Peter Tutton said: "These should help to disrupt the toxic 'debt spiral' effect that overdrafts can create, trapping people in a persistent cycle of overdraft debt.
If you rely on an overdraft, it's important you check and compare the costs - and if you find an account with cheaper charges, switch.
ICICI Bank will also offer a facility of instant online sanction of overdraft facility to MSME customers of other banks shortly.
Federal Reserve Board rules that take effect July 1 will require banks to get customers' permission before enrolling them in overdraft services for ATM and debit card transactions.
The idea of overdraft protection isn't new - banks have long been willing to cover not-sufficient-funds checks for their best customers, or make an automatic transfer from a savings account to avoid a checking overdraft.