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Banking
Overdraft
A credit facility linked to your bank account that allows you to spend more than your available balance, up to an agreed limit. Interest is charged daily on the overdrawn amount. In South Africa, overdrafts are considered credit under the NCA and require an affordability assessment.
Usage Examples
"Her bank approved an overdraft of R10,000 on her cheque account for emergencies."
"Overdraft interest is charged daily on whatever amount you're overdrawn — if you use R5,000 of a R10,000 overdraft, you only pay interest on the R5,000."
"Relying on your overdraft every month is a warning sign that you're spending beyond your means."