What Is an Overdraft?

An overdraft is a credit line provided by a lender when a customer’s account balance falls below zero. The overdraft allows the account holder to withdraw money even if there are no funds in the account or insufficient cash to meet the withdrawal amount.
An overdraft is a loan from a bank that allows clients to borrow a certain amount of money. There is interest on the loan, as well as a charge for each overdraft. An overdraft fee at certain institutions may be as high as $35.

Overdraft facility is a service provided by financial institutions which permits an account holder to use or withdraw more than they have in their account.

The overdraft amount usually cannot exceed a specified limit and has to be repaid within a limited time, usually a month.

The intention is to help individuals or small businesses which are facing short term cash flow problems.