Bank overdraft

A type of loan for account holders provided by bank which can be extended up to a certain limit (called overdraft limit) against current account. In other words where the account holder is allowed to withdraw money or write checks more than account holder's current account balance up to a certain limit known as overdraft. Overdraft is type of revolving loan because bank provides over drafts from their available deposits or credits and interest is charged on daily debit balance of an account holder's account. Overdrafts is most popular type of loans in business world because of their affordability and ease of arrangement