OverDraft

OD Limit | Overdraft Limit Place Enquiry

 

An overdraft is a borrowing facility attached to your bank account; it is set at an agreed limit and paid over an agreed period. It is ideal for your day-to-day expenses, particularly to see you through cash flow problems. Many Businesses use an overdraft for their working capital; helping them buy stock, pay staff, etc, in order for their business to function.

An Overdraft is likely to cost more than a loan for a long-term purchase. Also, there could be stiff charges if you exceed your overdraft limit and the bank has the right to ask for repayment for the amount you are borrowing at any time. It is important for businesses to monitor spending carefully and not to exceed their limit as it would result in them paying much more then they initially borrowed.

Advantages

  1. An overdraft is flexible - you only borrow what you need at the time which may make it cheaper than a loan.
  2. You only pay for the funds you use.
  3. It's quick to arrange.
  4. There is not normally a charge for paying off the overdraft earlier than expected
  5. Interest will be payable only the days you have used funds.