17 - Banking -- Lines of Credit and Overdrafts

Banking -- Lines of Credit and Overdrafts

1 -- Line of credit

It is effectively a bank account that can readily be tapped at the borrower's discretion. Interest is paid only on money actually withdrawn. Lines of credit can be secured by collateral or unsecured. A line of credit may take several forms, such as overdraft protection, demand loan, and term loan.

2 -- Overdraft

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.

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From: TreasuryOcean

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Capital Direct Line of Credit Loan

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