BANKING AFFAIRS

Detailed explanation-1: -An overdraft is a loan provided by a bank that allows a customer to pay for bills and other expenses when the account reaches zero. For a fee, the bank provides a loan to the client in the event of an unexpected charge or insufficient account balance.

Detailed explanation-2: -Business overdrafts are a common type of short-term finance. For medium to long-term borrowing needs, a bank loan may be more suitable. Other short-term solutions include cashflow finance/invoice factoring or business credit card.

Detailed explanation-3: -An overdraft is a negative balance in your account. An overdraft occurs when you spend more money than you have available in your checking account and the Bank pays your transaction anyway.

Detailed explanation-4: -Bank overdraft can be regarded as a short term financing instrument which can be availed by a bank account holder with a bank. It is not purely a loan like the conventional loan types, for eg home loan, business loan, personal loan, etc.

Detailed explanation-5: -An overdraft is a form of debt and is repayable on demand. Always make sure you have enough money in your current account, or a suitable arranged overdraft limit in place before any payments are due to come out of your account.