Banks offer an overdraft facility as a financial service through an OD account. An overdraft is a credit line extended by a lender when a customer's account balance dips below zero. This facility allows the account holder to withdraw money even if there are insufficient funds in the account. Kare Financial Services can assist you in obtaining an overdraft in Bangalore with quick approval and a seamless bank procedure.
Overdraft in Bangalore
When you open a bank account, you gain access to various financial services, including an overdraft facility. An overdraft allows funds to be withdrawn from a current or savings account even if the balance falls below zero. It's essentially a monetary limit extension provided by banks, with the withdrawn amount termed as being "overdrawn." Each customer is assigned an approved overdraft limit based on their relationship with the bank, allowing withdrawals up to the specified amount. Banks charge interest on the amount withdrawn via an overdraft.
Overdraft Facility Interest Rate
The interest rate on an overdraft facility varies among private and public sector banks and is influenced by factors such as the loan amount, repayment term, and borrower's profile. Typically, the interest rate is set at 1% over the time deposit rate, with the repayment period determined based on the borrower's capacity and the overdraft amount.
What is an Overdraft and How Does It Work?
An overdraft is a type of credit provided by a financial institution linked to a bank account, usually a checking account. When a customer's account lacks sufficient funds for a transaction, the overdraft covers the shortfall, causing the account balance to become negative. Overdraft protection works by providing short-term credit to account holders when their balance falls below zero. It can take various forms, such as linking multiple accounts to ensure immediate access to funds if needed, thereby preventing overdraft fees or transaction failures.
Overdraft Limit
The overdraft limit is the maximum amount that can be withdrawn in addition to the available bank balance. Exceeding the overdraft limit or failing to make payments may result in additional fees levied by the bank. Financial institutions may also offer an OD Limit against property.
OD Accounts
Overdraft facilities can be accessed through any savings or current account, with eligibility determined by the customer's repayment history and account balance. Various types of overdraft accounts are available, including overdraft on loans, which allow borrowers to use surplus funds in their loan accounts to reduce the loan's outstanding balance.
Overdraft Characteristics
- Some banks offer overdraft protection when an account balance reaches zero.
- Account holders with an overdraft can continue making payments even if their account balance is insufficient.
- Interest is charged on the outstanding overdraft amount, similar to any other loan, with the interest rate typically lower than credit cards.
- Additional fees may apply for using overdraft protection, such as inactivity fees per check or withdrawal.
Kare Financial Services provides assistance in obtaining overdraft facilities, ensuring a smooth process and quick approval for customers in Bangalore.