Sunday, December 5, 2010
Overdrafts are a loan that is available to most people with bank accounts. Overdrafts are an additional loan limit on your bank account which allows you to spend more money than is in your current account. An overdraft is a loan and does have to be paid back.
The overdraft is available in various amounts depending on your income. The only requirement is that you have a stable job with a stable income for most overdrafts. The bank loan you the agreed amount which is accessible via your current account. To change or add an overdraft to your account, simply contact your local bank.
There are many benefits to an overdraft loan. It offers a short term loan to borrowers that provide them with a small amount of additional money until they receive their wage. The repayment is deducted as soon as money is put into the bank which leaves no outstanding loans to repay. The loan can also be extended immediately when required. This helps meet the needs of the borrower.
The downside to overdraft loans is that when money enters your account, it is immediately taken to cover the overdraft loan repayment. This means that you have no control over when and how the loan is repaid and can leave you unexpectedly short of money. When the overdraft limit is exceeded, charges are placed on the account. This happens every time you try to spend money on your account that is not available. This can add up to a large sum of money.
Your overdraft loan can be accessed via an ATM machine. You simply put in your card to withdraw the required amount of your overdraft. You can also use your overdraft by spending on your debit card in a shop.
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