Bank Overdraft Debit or Credit: Every person has to face a sudden financial crisis at some point or the other. For this, he keeps making his preparations in advance. But what if no one is ready? What are the avenues left for him? In this news, we will give you information about how to work in times of economic crisis, and how you can overcome this crisis. We’ll let you know about a new banking option. You can simply meet your financial needs by doing this. This is a feature of the bank’s overdraft facility.
What is overdraft
A bank overdraft facility is available for both public and private banks. Most banks offer this option in this case for current accounts, salary accounts, and fixed deposits (FD). Additionally, some banks provide overdraft facilities secured by securities like shares, bonds, and insurance policies. You can borrow the money you need from the bank using this option and then repay it at a later time.
If you
If you already have an FD in the bank, it is fine. Otherwise, you will have to mortgage any of your assets with the bank. The bank will then offer you the overdraft facility after that. Nowadays many banks offer overdraft facilities in advance to their good customers. Employees who get a salary in a month can easily get into overdraft.
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Tells you how much money you can get while taking an overdraft from the bank. The bank sets your limit. What have you pledged with the bank for this facility? Banks maintain a greater restriction for pay and FD transactions. For example, if you have made an FD of Rs 2 lakh in your bank, the bank can set a limit of Rs 1.60 lakh (80 percent) for overdraft. In the case of shares and debentures, the limit is 40 to 70 percent.
Read More: Personal loans will be available in a pinch from any bank including SBI, try these 5 great funds.
What is the advantage?
A credit card or other personal loan is thought to be far less expensive. You have to pay less interest on this. In other overdrafts, you have to pay interest only for the time for which you take the money.
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