Overdrafts

Question 1

What is an overdraft

Answer 1

An overdraft is a type of loan that lets you borrow money from your current account to spend more than you have in the account.

Question 2

What are the advantages of overdraft

Answer 2

You can borrow what you need to (up to your overdraft limit).

Applied flexibility when paying it back.

Immediate access to funds when needed and when eligible.

Question 3

What are the disadvantages of overdraft

Answer 3

There is applied interest to overdraft.

Going over the previously agreed overdraft may damage your credit score.

Question 4

When is overdraft usually used

Answer 4

When a business needs finance at a fast rate

Question 5

Is overdraft a long term or short term source of finance

Answer 5

Short term source of finance