BANKING AFFAIRS

Detailed explanation-1: -An overdraft lets you borrow money through your current account by taking out more money than you have in the account – in other words you go “overdrawn”. There’s usually a charge for this. You can ask your bank for an overdraft – or they might just give you one – but don’t forget that an overdraft is a type of loan.

Detailed explanation-2: -If your bank reduces or removes your overdraft limit Your bank can ask you to pay off all of the money you owe them at any time. They might do this if you keep going over your agreed limit.

Detailed explanation-3: -If your balance goes into overdraft, the funds are transferred automatically to your checking account to cover the difference. In other cases, the bank won’t return the transaction and process it, which means you’ll be charged fees until you deposit money to cover the difference.

Detailed explanation-4: -An overdraft is like any other loan: The account holder pays interest on it and will typically be charged a one-time insufficient funds fee. Overdraft protection is provided by some banks to customers when their account reaches zero; it avoids insufficient funds charges, but often includes interest and other fees.

Detailed explanation-5: -Non-sufficient fund (NSF) fee Sometimes called insufficient funds fees, they’re common with bounced checks and automatic bill payments. 1. And the fee typically costs the same as an overdraft fee.