Overdraft Meaning – An overdraft is a type of loan that allows a bank account holder to withdraw more money than they have in their account. It is a short-term loan that is typically used to cover unexpected expenses or an emergency.
An overdraft is a convenient way to cover unexpected expenses without having to worry about having enough money in your account. It is also a great way to avoid bounced checks or other fees associated with insufficient funds.
When you overdraft your account, the bank will cover the extra amount and charge you a fee for the service. The fee is usually a percentage of the overdraft amount, and it can vary from bank to bank.
The overdraft limit is the maximum amount of money you can withdraw from your account without being charged an overdraft fee. This limit is set by your bank and is usually a few hundred dollars.
If you overdraft your account more than the limit, you may be charged an additional fee. You may also be charged a fee for each day the overdraft amount remains unpaid.
It is important to keep track of your account balance and make sure you don’t overdraft your account. If you do, it is important to pay back the overdraft amount as soon as possible to avoid additional fees.
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