ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If you spend more money than you have in your checking account and end up with negative balance, your bank or credit union may cover the payment and charge you an overdraft fee.

Detailed explanation-2: -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: -An overdraft allows you to spend more money than you have in your bank account-up to a limit agreed with your bank. You only pay interest on the overdraft money you use.

Detailed explanation-4: -Non-sufficient fund (NSF) fee Sometimes called insufficient funds fees, they’re common with bounced checks and automatic bill payments.

Detailed explanation-5: -There are two basic types of overdrafts – secured and unsecured. While the former requires assurance in the form of collateral, the latter only needs the borrower to hold an account with the lending bank. The banks charge a processing fee initially and then impose interest on the sum overdrawn or the borrowed amount.