Overdraft
A credit facility that lets you spend more than your account balance, up to an agreed limit, for a fee or interest.
An overdraft allows your bank account to go negative up to a pre-approved limit, acting as a short-term safety net. While convenient, overdrafts often carry high interest rates and fees, making them an expensive way to borrow if used continuously. They are best reserved for genuine short-term gaps, not as a permanent extension of your income. Relying on an overdraft month after month is a warning sign of negative cash flow. Tracking your balances in Assetli helps you spot and break that pattern early.
Example
With a $1,000 overdraft limit and a $50 balance, you can still pay a $600 bill, but you will owe $550 plus overdraft interest until you top the account back up.
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Related terms
APR (Annual Percentage Rate)
The annualized cost of borrowing expressed as a percentage, including interest and mandatory fees, used to compare loan products.
Interest Rate
The percentage charged on borrowed money or earned on deposited/invested money, expressed as an annual rate.
Debt-to-Income Ratio
The percentage of your gross monthly income that goes toward debt payments, used by lenders to assess borrowing capacity.
Explore more terms
Debit vs Credit Card
A debit card spends your own money instantly; a credit card borrows the bank's money to be repaid later.
Transaction Categorization
The process of classifying financial transactions into categories like groceries, rent, or entertainment to analyze spending patterns.
Recurring Transactions
Transactions that repeat at regular intervals — subscriptions, loan payments, salary deposits — essential for predicting future cash flow.
Bank Synchronization
The automated process of importing transactions from bank accounts into a financial management tool, either through API connections or file imports.
IBAN
International Bank Account Number, a standardized format for identifying bank accounts across borders.
Direct Debit & Standing Order
An authorization that lets a company collect variable or recurring payments directly from your account.