The overdraft is a short term loan servicing company’s payments. It can de defined as a granted amount up to which the company can make payments bigger than the available assets in the company’s current account. The overdraft is granted through the customer’s current account and is paid off through it too.

 

The overdraft is granted for a short period of time and is meant to solve current liquidity problems. The interest is calculated over the loan amount actually used by the customer, i.e. over the debit balance. The customer can deposit money in the current account at any time and thus decreases his remaining debt.