OVERDRAFT Meaning and
Definition
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An overdraft refers to a financial arrangement provided by banks or other financial institutions that allows an individual or business to withdraw more money from a bank account than the available balance. It is essentially a form of short-term borrowing facility that enables account holders to spend or make withdrawals beyond the funds they currently have in their accounts.
When an overdraft is used, the account holder is essentially borrowing money from the bank, resulting in a negative balance on their account. Overdrafts are typically made available to customers who have a good credit history and a consistent income. However, some banks may also offer arranged overdrafts to customers who meet certain criteria, often subject to an agreed-upon limit.
The use of an overdraft may attract interest charges or fees, which are incurred based on the amount borrowed and duration of the overdraft. The account holder usually has the flexibility to repay the overdraft at any time, either through making deposits into the account or over an agreed-upon period. Overdrafts can be an effective way to manage short-term cash flow issues or unexpected expenses, providing a safety net and allowing individuals or businesses to maintain their financial obligations without disruption.
It is important to note that an overdraft should be treated as a form of credit and used responsibly. Mismanagement of overdrafts can lead to additional financial difficulties and incur substantial costs, hence it is recommended to carefully monitor and manage the balance to avoid unnecessary charges.
Top Common Misspellings for OVERDRAFT *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for OVERDRAFT
Etymology of OVERDRAFT
The word "overdraft" is a combination of two words: "over" and "draft".
The term "draft" originated from the Old English word "dræft", which meant "drawing, pulling, or act of drawing water". Over time, "draft" evolved to refer to a written order or a written demand for payment. In banking, it specifically referred to a written order or instruction to pay a certain sum of money from one account to another.
The word "over" has its roots in the Middle English word "over", which means "above" or "above and beyond". It is derived from the Old English word "ofer", which has similar meanings.
Combining these two elements, "overdraft" came to mean an excess or amount surpassing the balance or allowed limit in a bank account.
Similar spelling words for OVERDRAFT
- overtire,
- overtop,
- overdraw,
- overtake,
- Overturf,
- overdo,
- overdrive,
- overtime,
- overdress,
- overtaking,
- Overturning,
- overthrown,
- Overton,
- overturn,
- overeat,
- overdue,
- overturned,
- overtax,
- overrating,
- overture,
- overtone,
- overrate,
- overheated,
- overheat,
- overeating,
- Overtly,
- overthrow,
- overdressed.
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