overdraft credit
Definition
Noun: A pre-arranged borrowing limit from a bank that allows a customer to withdraw more money than they currently have in their account, up to a specified amount. The bank honors transactions (like checks or debit card payments) that would otherwise be rejected due to insufficient funds, effectively extending credit to cover the shortfall.
Usage
This term refers specifically to the credit facility itself, not the state of having a negative balance. * The bank approved an overdraft credit of $500 on my checking account. * Using your overdraft credit will incur interest charges. * She applied for an overdraft credit to avoid declined transactions.
Advanced Usage
- "to have an overdraft credit": To possess this pre-approved credit line from a financial institution.
- All premium account holders automatically have an overdraft credit.
- "to arrange/set up an overdraft credit": To formally establish this credit facility with a bank.
- I need to call the bank to arrange an overdraft credit before my trip.
Variants and Related Words
- Overdraft (Noun): Often used interchangeably with "overdraft credit," but can also refer specifically to the amount of money by which an account is overdrawn (the negative balance itself).
- I have a $200 overdraft. (This could mean a $200 negative balance OR a $200 credit limit, depending on context.)
- Overdraft Protection (Noun Phrase): A service that links another account (like a savings account) or a line of credit to cover overdrafts, often used synonymously with "overdraft credit."
- Credit Line / Line of Credit (Noun Phrase): A broader term for any pre-arranged borrowing limit, which can include overdraft credit.
Synonyms
- Overdraft facility
- Overdraft line of credit
- Checking account credit line
Related Phrases
- "to honor an overdraft": For a bank to allow a transaction that creates a negative balance, typically because an overdraft credit is in place.
- The bank will honor the overdraft due to your good credit history.
- "to go into overdraft" / "to use one's overdraft": To utilize the available overdraft credit, resulting in a negative account balance.
- I had to go into my overdraft to pay that unexpected bill.
Noun
-
credit provided by a bank in honoring a customer's overdrafts
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