bank overdraft question
aj7861
Registered Posts: 62 Regular contributor ⭐
for the advantages i need to know a couple of things
1) it is flexible and efficient but why?
2) relataively easy to increase limit but how?
please help
thank you
1) it is flexible and efficient but why?
2) relataively easy to increase limit but how?
please help
thank you
0
Comments
-
1. It is flexible due to the way that you can repay any amount of the overdraft, and then draw on it again, at any time without having to agree it with the bank. It is efficient in that you only have to pay interest on the amount of the overdraft that you are using at any time, instead of on the whole balance of a fixed loan, which you might not need to use.
2. Just apply to the bank for a higher limit.0 -
1. It is flexible due to the way that you can repay any amount of the overdraft, and then draw on it again, at any time without having to agree it with the bank. It is efficient in that you only have to pay interest on the amount of the overdraft that you are using at any time, instead of on the whole balance of a fixed loan, which you might not need to use.
2. Just apply to the bank for a higher limit.
bit more explaining on the 2nd point please:001_smile:0 -
bit more explaining on the 2nd point please:001_smile:
Well, an HSBC customer might apply using the options available on this screen.0 -
Don't forget however that an overdraft can be called in/cancelled on demand meaning you may run out of liquidity. Being unexpectedly forced to repay the funds could in turn jeopardise the trading future of the business as happened in the infamous collapse of Farepak a couple of years ago..
In the current climate, an overdraft might be hard to increase due to the credit contraction being exercised by the banks who are more concerned about their own liquidity rather than that of their customers...
Oops, sorry just read you were only after advantages!0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 323 NEW! Qualifications 2022
- 165 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 88 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership