An overdraft is a credit extension provided by financial institutions that can be linked to your monthly salary. It can extend the credit of your account when it reaches zero, providing you with more liquidity in order to cover unforeseen expenses. If you have difficulty allocating payments for your monthly bills and often find yourself with no cash at the end of the month, then an overdraft will help you cover your basic needs.
Designed to cover short-term cash flow deficiencies, an overdraft is an unsecured form of credit linked to your transaction account. Having an overdraft means you can borrow money through your current account even if you don’t have sufficient funds to do so. This line of credit functions as a buffer for emergencies or when you need some extra cash at the end of the month.
With an overdraft you can withdraw funds from your account up to the approved and agreed upon limit you have signed up for with your financial institution. By extending your account limit with an overdraft, you can avoid overdrawn or dishonour fees, as this will extend your limit and not affect your account even if it reaches a zero balance.
The great thing about an overdraft is that you can set up direct debit accounts or automate payments for your utility bills without dipping into your salary. By paying your bills on time you will be able to settle your obligations and not risk hurting your credit score with an accumulation of overdue or late payments.
An overdraft is a more favourable option compared to other loan products offered by financing institutions, as you only have to pay interest on the amount you have withdrawn. What’s more, overdrafts don’t usually have a set repayment schedule, giving you the flexibility to decide when you want to make a repayment. Simply settle your balance when your salary is credited to your account, and withdraw cash from your overdraft again when you need to do so.
With a variety of loan products at your disposal, you can choose which one best suits your needs and budget. Reach out to Ellinas Finance today for the assistance and assurance you need.