What are the uses of an overdraft?

vitalis_2

I'm a bit confused with the term overdraft. If let's say the bank gives you £2000 overdraft 0%AER...

- can you withdraw £2000 if don't have any money in your account?
- can you choose to use the £2000 overdraft provided to pay for something instead of the money available in your account?
- what are the uses of an ovedraft?

daveholiday

1) Yes
2) No. E.g. if you have £300 in your account and a £2000 overdraft facility, you have £2300 to spend in total, although your balance is only £300, the amount you have put in. If you spend £100 your balance will be £200 with £2200 available to spend.
3) To use if you have run out of money (you have to pay it back eventually) and need extra. If it's a 0% overdraft then by all means use it, if it's an interest bearing overdraft then it might be better to get another form of debt as overdrafts can be very expensive.

Butlers1982

what are the uses of an ovedraft?

If your money situation is tight, it helps cover the worry of incuring charges for going into negative balance.
Eg if you have a DirectDebit going out of your account and you only have £30 left but the DD is £40, then its a little extra leway

£2000 overdraft 0%AER

That wouldnt happen, unless your a student, the majority if not all overdrafts are chargeable.