What is overdraft

What is overdraft – over a planned , cost overruns  – a kind of short-term credit personal account . A feature of this loan is that it can be replenished throughout the crediting period.

Process maturity of the loan is not difficult to conventional lending. Interest is charged only on the actual debt on the account. Overdraft allows charge your account the necessary amount to a certain limit.

Overdraft has the following algorithm : you often need money for current payments , the calculation with partners , or commit securities purchases and so on. But while you’re on your account is constantly receiving money ( such as wages) .

Not to go to the bank every time and do not execute each time a new loan for a major purchase or transfer, you arrange an overdraft on his personal account .
Bank sets you overdraft limit ie the maximum limit within which you can borrow money from the bank .

In case of shortage of funds in your account , you will automatically start using the bank’s money , but within the set limit . Amount borrowed funds will be accounted for in your account with a minus ( debit balance ) and will be called overdraft .

Receiving salary or other income, you automatically repay the loan , together with accrued interest .
Some banks provide grace period . If the borrower to repay the entire debt on overdraft during this period, no interest is charged.