Sanderson Abel An overdraft according to Wikipedia occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the bank for an overdraft, and the amount overdrawn is within the authorised overdraft limit, then interest is normally charged at the agreed rate.
If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply. If your account ends up overdrawn, be sure to deposit money in your account as soon as possible to cover the overdraft plus any fees that may be assessed. By doing so, you'll avoid additional overdrafts and fees.
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