An overdraft occurs when something is withdrawn in excess of what is in a current account.

Bank overdraft is a type of financial instrument that is provided to some customers by the bank in the form of an extended credit facility, which comes into effect once the main balance of the account reaches zero. In other words, bank overdraft is an unsecured form of credit that is mainly used for covering short term cash requirements. Banks offer a credit limit to the bank customers based on their relationship with the bank. The bank levies separate interest and charges towards non-maintenance of account. The interest rate for the overdraft facility may vary from bank to bank.

Overdraft service is a service that allows a customer to withdraw money from an account even when the balance is zero or insufficient. It is a form of loan provided by a bank or a credit union for a fee or a charge. Overdraft service can help customers pay for bills and other expenses in an emergency. Some banks offer overdraft protection, which transfers money from a linked account to cover the overdraft.