An overdraft is when your bank lets you spend more than you have in your account. It’s like a short-term loan that kicks in automatically. While convenient, overdrafts can be costly if you don’t manage them carefully.
✅ 5 Things to Know About Overdrafts:
- The bank covers your payment even if your balance is too low.
- You’ll pay fees or interest on the borrowed amount.
- Some banks charge daily until you repay the overdraft.
- It’s helpful in emergencies but expensive for regular use.
- Repeated overdrafts can hurt your relationship with your bank
👉 An overdraft is a backup tool — not a main way to borrow.