A Bank Account is a popular financial instrument that lets you park your money securely, make different transactions, and conduct numerous banking activities. You can choose from different Bank Accounts. Each account has unique features and benefits, consider them to open a suitable account. You can open any Bank Account with any leading bank. Typically, opt for a bank offering the maximum banking benefits.
A Current Account is a deposit account you can consider opening to manage your business finances. The account lets you make significant value deposits and make several withdrawals. It extends countless benefits, such as unlimited chequebook and demand drafts, letting you meet your business financial requirements in a hassle-free manner. You can opt for the Current Account opening online or visit the bank to open an account.
An overdraft facility is another benefit of opening a Current Account. Let us understand this concept better.
About overdraft facilities
Handling business finances is a task. At times, you receive numerous payments from your customers. Otherwise, you do not receive any payments. Given this, there is an imbalance in your cash flow. In such situations, a sudden business financial requirement comes up, and you are worried about meeting the requirements. A Current Account helps here. As mentioned, a Current Account extends an overdraft facility.
This facility lets you withdraw money from your account despite a zero balance. The amount withdrawn by availing of the overdraft facility is called overdrawn. You can withdraw funds up to a fixed limit only. The bank sets the overdraft facility limit depending on your account type and standing relationship with them.
Contact the bank’s customer representative or check their website to learn about the overdraft facility and associated terms before Current Account opening online. The higher the overdraft facility limit, the better.
How is interest calculated on the overdrawn funds?
Since an overdraft facility is a credit facility, you bear an interest. The bank decides the overdraft facility interest structure and tenure. They charge interest only on the amount you withdraw. The interest is calculated considering the time you used the amount. This makes the repayment affordable. You can repay the overdrawn amount in equated monthly instalments or as you find it convenient.
If the bank needs you to make partial and complete repayments, you need to meet their demands.
How to avail of the overdraft facility?
You need to inform the bank when you wish to avail of the overdraft facility with your normal Current Account. You need to notify the bank of the amount and time for which you would like to avail of the overdraft facility. You can inform the bank by visiting their nearest branch in person or raising a request on the Online Banking platforms. The bank processes your overdraft facility request within the shortest possible timeframe.
