An overdraft facility is a current account credit that a bank extends to its customers. It allows one to withdraw money from their current account even if the balance is zero, up to a certain limit. This is the current account with overdraft facility in simple terms.
Do Current Accounts Have Overdrafts Facility?
Usually, banks provide current account with overdraft facilities but not all of them. Some banks offer accounts with overdraft options while others may require you to fill out an application requesting for the facility.
Since you now have an idea about what is the overdraft facility, let me share its types as well:
Secured overdrafts: an overdraft that is linked to an asset you own like property or FD
Unsecured overdrafts: an overdraft that does not require any collateral or security
Demand overdrafts: a short-term overdraft facility that is withdrawn on demand by the bank
Time-bound overdraft: an overdraft facility for a current account that has a fixed duration agreed in advance
Some advantages of this overdraft facility include:
Flexibility: Access additional funds beyond the account balance.
Cash Flow Management: Helps manage shortfalls, ensuring timely bill payments.
Lower Interest Rates: Generally cheaper than personal loans or credit cards.
Convenience: No need for a separate loan application.
Emergency Cushion: Provides financial support during unexpected expenses.
So this is what current account with overdraft facility mean along with its types and advantages.
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Do Current Accounts Have Overdrafts?
Barkha
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9 months
2024-07-31T08:11:39+00:00 2024-07-31T08:11:42+00:00Comment
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