Overdraft

Definition

• The act of overdrawing a bank account. This means that the account holder wrote a cheque or withdrew funds greater than the available balance in his or her bank account. Also known as insufficient funds.

Notes
Bank account transaction code.

Synonyms
overdrawn, negative balance, deficit

Acronyms
DR

Related Terms and Acronyms

• Account Agreement — Definition,
  • An agreement that you sign and which lists your rights and responsibilities and the bank's rights and responsibilities for the bank account.
• Insufficient Funds (ISF) — Acronym,
  • When funds are not enough to satisfy the payment of a cheque or draft made on that account; also known as non-sufficient funds (NSF).
• Joint Account (J/A) — Acronym, Important,
  • A bank account owned by two or more persons who share equally in the rights and liabilities of the account.
• Minimum Balance to Open an Account — Definition,
  • The minimum initial deposit required to open a bank account.
• Overdraft Annual Cost — Definition,
  • A fee charged by the bank to cover the overdraft feature on a client's chequing account. The client pays the fee even if the overdraft protection is never activated. This fee may be charged in addition to the one-time fee.
• Overdraft Minimum Amount — Definition,
  • Minimum amount that will be transferred to the accountholder's account if a potential non-sufficient funds (NSF) situation occurs.
• Overdraft Protection — Definition,
  • A service that allows a chequing account to be linked to another savings or line of credit to provide protection against insufficient funds or overdrafts.
• Passbook — Definition,
  • A book used to record all banking transactions for a designated account.