Are bank overdrafts a right choice?

Bank overdrafts, financial tipsWhen money is withdrawn from a bank account and the account balance goes lower that zero, a bank overdraft is said to have happened. The account is thus overdrawn. A bank overdraft is only possible you have a prior agreement with the provider of the account and the amount that has been withdrawn is limited to the authorized bank overdraft limited. Interest is also generally charged at a predetermined rate.

Bank overdrafts are a right decision if the intention of the account holder is short term loan for financing his business. It helps to settle disbursements of cash and bills that are unforeseen. New ventures that need small set up capital for most other reasons Bank overdraft is not the right decision to make for a reputed existing business enterprise or for the record of a clean account holder. Other reasons of bank overdraft include failure in maintaining account register, charge sheet to merchant etc.

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