The amount a current account holder is allowed to withdraw in excess of the balance...
COMMERCE
WAEC 2021
The amount a current account holder is allowed to withdraw in excess of the balance in his account is _______
- A. standing order
- B. overdraft
- C. interest
- D. credit transfer
Correct Answer: B. overdraft
Explanation
An overdraft is a loan facility available to only current account holders, where a bank allows a customer to withdraw or take out more money than the account holder has in the account.
This means if a bank customer has only N10,000 in the bank account and needs, say N20,000 to meet financial obligations, they can request an overdraft which allows them to withdraw up to N20,000 with a promise of paying back on a specific day. This is very common among salary earners who have a stable means of income.
The money is then deducted directly from their next deposit depending on the terms of repayment, whether full or on installment.
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