What is an over-draft facility in banking terminology?

Question

What is an over-draft facility in banking terminology?

Answer 1

An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn".

If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

Answer 2

this means that for exmaple yuo issued a cheque and you really dont have any money left in your account then these people you issued the cheque to go to the bank and they honor the cheque but charge an interest on you whne they ask you later for returning the money. its like short term lending by banks.

Answer 3

refer to above answer

Answer 4

its a credit,which bank is willing to trust you with

Answer 5

A short term loan facility. You are allowed a certain amount to go overdrawn. You don't have to use your overdraft facility