Overdraft Facility (OD)

An overdraft (OD) occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn".

If there is a prior agreement with the account provider for an OD, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

An OD is standby facility for your urgent, unexpected financial needs that enables you to obtain cash without unlocking your investment. If you have an OD account, your bank will cover cheques which would otherwise bounce.

As with any loan, you pay interest on the outstanding balance of an overdraft loan, the interest imposed on OD normally is higher than Base Rate / BLR.

Often the interest charged on the OD loan is lower than credit card's loan.

undo Other Banking Products