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Finance & Banking vocabulary · Accounts & Deposits

Overdraft

Meaning in finance & banking, with examples

/ˈoʊvərdræft/nounCore term

In finance & banking, overdraft means: An arrangement that lets you spend more money than you have in your current account, up to an agreed limit, usually with interest charged on the negative balance.

In Turkish: kredili mevduat hesabı, KMH, ek hesap

How it is used

Common in retail and business banking. A customer has, uses or goes into an overdraft, and the bank sets an overdraft limit. The adjective 'overdrawn' describes an account with a negative balance.

Example sentences

  1. Her account went into overdraft after the rent payment.

  2. Small businesses often use an overdraft to cover short gaps in cash flow.

Common collocations

  • overdraft limit
  • go into overdraft
  • arranged overdraft
  • overdraft fee
  • pay off an overdraft
  • current accountAn everyday bank account for receiving a salary, paying bills and making card payments. It pays little or no interest, and the money can be used at any time.
  • balanceThe amount of money in an account at a particular time, or the amount still owed on a loan or credit card.
  • credit limitThe maximum amount a bank allows a customer to borrow on a credit card or a credit line.
  • bank chargesFees that a bank takes for its services, such as account maintenance, transfers, overdrafts or replacing a card.

More terms: Accounts & Deposits

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This page explains English vocabulary for learners. It is not financial advice.