Think of a bank overdraft as a temporary safety net offered by your bank. It lets you spend or withdraw more money than you actually have in your account, up to a certain pre-approved limit. How it works If you have ₹1,000 in your account but need to pay ₹1,200 , an overdraft allows the transaction to go through. Your account balance will then show as -₹200 . The bank charges interest only on this ₹200 (the amount you "borrowed"), not on the entire limit they might have offered you. You're expected to repay this negative balance, plus any interest and fees, to bring your account back to positive. Key things to know Short-term help : Overdrafts are best for covering unexpected bills or bridging short-term gaps until you get more money (like your next salary). Flexible repayment: You usually don't have fixed monthly payments (EMIs) like a regular loan. You can repay the amount when you have funds. Interest and fees: Banks charg...