Meaning & use
overdraft facility
Last updated
Meaning
nouncountablebusinessfinance
An arrangement with a bank that lets you spend more money than is in your account, up to a fixed limit.
Grammar: Countable: say 'an overdraft facility' or 'overdraft facilities'.
Patterns
- have an overdraft facility
- arrange an overdraft facility with a bank
- a £5,000 overdraft facility
The small business arranged a £20,000 overdraft facility with its bank.
Without an overdraft facility, the charity could not pay salaries on time.
The bank agreed to extend the overdraft facility for another year.
Word forms
| plural | overdraft facilities |
|---|
Common combinations
- arrange an overdraft facility
- They arranged an overdraft facility before the busy season.
- an overdraft facility with a bank
- She set up an overdraft facility with a local bank.
- extend an overdraft facility
- The lender agreed to extend the overdraft facility by six months.
- a temporary overdraft facility
- We used a temporary overdraft facility to cover the gap.
Synonyms and how they differ
- overdraft
- Shorter and more common in everyday speech; 'overdraft facility' stresses the agreed arrangement and limit.
- line of credit
- Similar but often for larger, longer-term borrowing; an overdraft facility is usually for day-to-day cash flow.
Word family
- overdraft noun
- The amount by which you overspend, or the arrangement itself.
- overdrawn adjective
- Having taken out more money than is in your account.
Commonly confused: overdraft facility or loan?
overdraft facility vs loan
A loan is a fixed sum you borrow and repay with interest; an overdraft facility is a flexible limit you can use as needed.
Practice
The company needed cash quickly, so it _____ an overdraft facility with its bank.
Choose one answer.
The natural verb is 'arranged' (or 'set up'). 'Made', 'did' and 'took' do not collocate with 'an overdraft facility' in this sense.
Make it your own
Write a sentence using “overdraft facility”, then check it and compare it with the examples above.