An overdraft is a banking facility that allows customers to withdraw or make payments beyond their available balance in their current account up to a certain limit. It serves as a safety net, preventing declined transactions and potential penalties for insufficient funds. Applying for an overdraft typically involves meeting specific eligibility criteria set by the bank, submitting a formal application, and providing supporting documentation that demonstrates financial stability and repayment capacity.
Overdrafts offer several benefits, including financial flexibility, convenience, and peace of mind. They enable individuals to cover unexpected expenses, manage cash flow fluctuations, and avoid the embarrassment of bounced checks or declined payments. Overdrafts have a long history, with their origins dating back to the 17th century when merchants and bankers extended credit to trusted customers.
