Overdraft Definition: An overdraft is a service or loan that provides access to extra money when there isn’t enough money in a bank account. This is an extension of credit that banks and financial institutions often provide.
When a bank account is at a zero balance, an overdraft is an extra amount of money that is provided, like a loan, which can help pay bills and other expenses when there are insufficient funds in the account. Fees incur every time the overdraft is used, which varies depending on the amount used, the frequency, and the bank or financial institution’s charges.
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