Explain the term ‘bank overdraft’. - Leaving Cert Business - Question 10 - 2009
Question 10
Explain the term ‘bank overdraft’.
Worked Solution & Example Answer:Explain the term ‘bank overdraft’. - Leaving Cert Business - Question 10 - 2009
Step 1
Short term source of finance
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
A bank overdraft is primarily a short-term source of finance that allows individuals or businesses to manage temporary cash flow issues.
Step 2
Withdrawal beyond account balance
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
It enables the customer to withdraw more money from their current account than what is actually available. This facility provides flexibility in managing unforeseen expenses.
Step 3
Interest on overdrafted amount
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Interest is charged on the amount that is overdrawn, which means that customers need to be aware of the costs associated with using this form of credit.
Step 4
Set limit on overdraft
98%
120 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Typically, there is a predetermined limit set on the amount that can be overdrawn. This limit is established based on the customer's creditworthiness and banking relationship.
Join the Leaving Cert students using SimpleStudy...
