A bank account holder can continue making transactions even if they don’t have enough money in their account by borrowing from the bank. The bank charges a one-time processing fee for this service. This fee can vary from bank to bank, and is meant to protect the bank’s customers. ..
Banks offer overdrafts to their customers as a way to help them manage their finances. This is a service that banks provide, like debit cards, net and mobile banking, and so on. Customers can use overdrafts to withdraw money from their savings or current accounts. ..
When should you use an Overdraft?
When you have an insufficient balance in your bank account, the bank may offer you protection called overdraft. Overdraft is a type of protection that the bank gives you to help cover your costs if you have too much money in your account.
How does it work?
The bank allows borrowers to borrow more money than their current bank account has in it. However, borrowers must pay charges until their limit is completed. The most important thing to remember is that if you borrow an overdraft, you will also be responsible for paying for it. To find the cheapest way to borrow money, borrowers should consider their account history and available borrowing options. If borrowers do not have an overdraft protection plan in place, the bank may notify them first and then allow them to borrow the amount. ..
Customers can pay overdrafts fully or partially and can borrow again when needed up to the limit.
Features:
Types of Overdraft are:
Predetermined repayment plans are popular among customers in this type of loan. ..
Bank will change the rate of interest accordingly, depending on the current market conditions.
Some Common facilities:
Customers with salaries are eligible for an overdraft with a limit of two or three times their salary. ..
Banks offer the ability to overdraft a savings account even if the customer has a minimum number of transactions. ..
Banks often offer this service, but the limit is lower than the market price. ..
If you have an overdrawn account, you can do up to 40-50% of your house’s worth of repairs and improvements without having to worry about the consequences.
