Definition

Noun: 1. A line of credit: A pre-arranged agreement with a bank that allows a customer to withdraw more money than they currently have in their checking account, up to a set limit. The bank provides this credit to "honor" or pay the customer's transactions (like checks or debit card purchases) that would otherwise be rejected due to insufficient funds.

Usage

This term is used in formal banking and financial contexts to describe a specific service or financial product. * Example: "To avoid fees for bounced checks, I applied for a check overdraft credit with my bank." * Example: "The bank's check overdraft credit gave me peace of mind for unexpected expenses."

Advanced Usage

• The term specifically refers to the credit facility itself, not the act of overdrawing. The act of spending more than the account balance is simply an "overdraft."
  • Example: "My check overdraft credit has a limit of $500." (The product/service)
  • Example: "I have an overdraft of $50." (The current state/amount)

Variants and Related Words

• Overdraft protection (n): A more common, customer-facing term for the same service. It "protects" the customer from having transactions declined.
• Overdraft line of credit (n): A synonymous phrase.
• Overdraft (n): Can refer to the credit facility, but more commonly refers to the deficit amount itself or the act of creating that deficit.
• Credit line (n): The general category of financial products that includes check overdraft credit.

Synonyms

• Overdraft facility
• Overdraft protection service

Related Phrases

• To honor an overdraft: The bank's action of approving a transaction despite insufficient funds, typically because a check overdraft credit is in place.
  • Example: "The bank agreed to honor the overdraft based on my good credit history."

Noun

1. credit provided by a bank in honoring a customer's overdrafts