When your bank account does not have a balance to cover the transaction or withdrawal but still, the bank allows the account holder to continue withdrawing money and transaction it's called Bank overdraft.
Fee and charges?
The interest rate charged on Bank Overdrafts Is a little higher it can be 11% to 15%. Some banks charge a fee for an overdraft and an annual fee.
How to apply?
Contact your Bank or building society for applying an overdraft. You can apply online, by phone, computer and PC or by filling out a printed application form given by Bank and summit it into the bank.
- Applying for Bank Overdraft facility applicant should be 23 years to 60 years.
- For bank overdraft facility you should have an active bank account.
- Applicant must have a good credit score.
There are two types of overdrafts: -
- Secured overdraft
- Unsecurd overdraft
Also Read:-HDFC Loan Against Property
How to Prevent Bank Account Overdrafts?
You can prevent bank account overdraft by following these:
1.Check account balance on regular basis:-
2.Transfer accounts to another bank: -
Most of the bank are accept bank account overdraft and do not charge any fee and interest. Bank thankful to account holder to open an account with them
3. Read bank letters:-
Sometime account holder thinks that it’s a routine communication and ignore it, but sometimes bank letter contains important information about your bank accounts and notice of bank overdraft.
Some documents are required for applying for an Overdraft facility:-
- Identity proof – you can use as a proof of id identity like card, Aadhaar card, voter Id, License, Passport etc.
- Address proof – you can use Driving license, Passport, Latest Gas Bill, property tax bill, Bank passbook, etc for address proof.
- Age- Age proof would be required by the lender such as PAN card, Aadhar card, Voter ID, Passport etc
- Bank statement of last 3 month
- Passport size photograph.
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