Many banks offer salary overdraft accounts to select existing salary account holders based on their credit profile and the profiles of their employers. Do you need fast cash or an instant credit line because of an unexpected expense or to deal with any unforeseen financial exigency? No need to worry if you are a salaried person and meet the eligibility criteria set by your bank if the bank offers the salary overdraft facility. Salary overdraft is a form of revolving credit that you can avail on your salary account, wherein you can withdraw a particular amount over and above the balance in your salary account when you need it. Many banks offer salary overdraft accounts to select existing salary account holders based on their credit profile and their employers’ profiles. Banks issue a pre-determined overdraft limit to such salary account holders, from which they can withdraw on facing fund shortages. “The instant pre-approved nature of this facility makes it an excellent credit facility to deal with unforeseen financial exigencies. These salary overdraft accounts can also be extremely helpful for avoiding unintentional cheque, EMI or SIP bounces due to insufficient funds in the salary account. Overdraw amount: It may be noted that every bank has its own set of eligibility parameters to determine the extent of overdraft allowed. Depending on the bank and the account, in most cases, the credit line ranges from one to three times the net monthly salary of the account holder. It may, however, be noted that interest is levied only on the drawn amount, and not on the entire sanctioned limit, for the period till their repayment. These accounts also offer higher repayment flexibility as the repayments are not made through EMIs. The account holders can repay the drawn amount in parts or in entirety as per their repayment capacity and without incurring any prepayment charges. However, those availing salary overdraft facilities are usually required to service the interest component of the drawn amount on a monthly basis. Differences between Personal Loan and Overdraft Facility
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