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Approved Credit Limit
Overdraft is awarded over a predetermined limit. This limit can be different for each borrower
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Interest Rate
The interest rate is charged on the amount of overdraft used. It is calculated on daily basis and it is billed to the account at month-end. If you default on paying the overdraft as per the set schedule, the interest amount will be added to the principal amount at month-end and then interest will be calculated on the new principal
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Nil prepayment charges
Whenever you want to prepay a loan, usually a prepayment charge is levied. However, this is not the case with the overdraft facility. When you repay the amount borrowed through overdraft you do not pay prepayment charges. Also, you need not repay the Overdraft amount in EMIs. You can repay the borrowed amount cumulatively
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Workings
Please note that your account may not automatically go into overdraft when you write a cheque. There are chances that your cheque is dishonored instead of going into overdraft and then a dishonor charge may be levied on your account