overdraft

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Related to overdrafts: Cash credit

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 ?
At the moment, just a small proportion of overdraft customers account for a significant chunk of the profits banks make from unarranged overdrafts.
Nine of the largest Arkansas-chartered banks collected more than $136 million in overdraft fees in 2018, according to reports by the Federal Deposit Insurance Corp.
More than 50 per cent of banks' unarranged overdraft fees came from just 1.5 per cent of customers in 2016.
Those who stray into an unarranged overdraft will now pay less than 20p a day, instead of PS5, for a PS100 loan.
The FCA first proposed the reforms back in December, saying it wanted to make overdrafts simpler, fairer and easier to manage.
Bailey told the committee unarranged overdrafts tended to fall "much more heavily on the most vulnerable in society".
See the 0 per cent year as time to clear what you owe, as after that you're charged 50p a day (cheap for bigger overdrafts, costly for smaller ones).
On average, overdraft users are PS285 in the red each month for nine days, paying PS56.52 every year to their bank in fees and interest.
Senators Cory Booker (D-NJ) and Sherrod Brown (D-OH) have introduced legislation to crack down on exploitative overdraft fees that banks charge consumers when they make a purchase or pay a bill but dont have sufficient funds in their account.
One recommendation to further transparency is to change the language of Regulation E's provision requiring the disclosure of alternative plans for covering overdrafts from permissive to mandatory.