Definition, Meaning & Synonyms
overdraft
noun
/ˈoʊvərdræft/
Definition
An overdraft is a financial arrangement that allows an account holder to withdraw more money than the balance available in their bank account.
Examples
- After several unexpected expenses, she found herself in overdraft and had to speak with her bank.
- The company was careful not to exceed its overdraft limit to avoid high fees.
- He set up an overdraft protection to ensure his payments would not bounce.
Meaning
It essentially results in a negative balance, where the bank loans the account holder the extra money which needs to be repaid, often with interest.
Synonyms
- negative balance
- bank overdraft
- overdrawn account
