You can dip into it when you need to, and not have to pay for it when you’re not using it.
And as they’re an extension to your current account, they’re easy to manage and keep track of through online and mobile banking.
In this guide, we summarise how overdrafts work, and the pros and cons of using them.
An overdraft is an arrangement with your bank that lets you spend more money than you have in your account.
If your bank balance goes below AED 0, you can keep spending money up to your overdraft limit.
You can pay it back at any point by transferring money into your account, but you’ll usually be charged interest for being overdrawn.
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Most banks offer an unsecured overdraft, and this is the most common type.
A secured overdraft, however, is an overdraft that’s secured by another asset, meaning the bank can claim this asset if you aren’t able to repay what you owe. This works in the same way as a mortgage, which is a secured loan against a property.
For HSBC secured overdrafts, your overdraft can be secured against a Term Deposit held with us.