Tired of paying for Credit cards and Payday loans? Overdrafts to your rescue!


Credit cards and payday loans are amongst the most popular options for availing urgent funds. Though these financing options are easily accessible, relying on them too often isn’t a wise decision. As far as payday loans are concerned, they are short-term loans with high-interest rates. Therefore, timely repayment of payday loans can be a tough task. Similarly, credit cards also come with high-interest rates and defaulting on credit cards can lead to serious concerns such as debt traps. This can further hamper your creditworthiness significantly.

Considering these drawbacks of credit cards and payday loans, it is safe to assume that a personal overdraft is a much better source of financing when you are in need of urgent funds.

What is a personal overdraft?

A personal overdraft is like an unsecured personal loan that can help you cover some of life’s unexpected financial emergencies. It allows you to withdraw funds and repay them at your convenience. Here are some of the features of a personal overdraft that gives it an edge over credit cards and payday loans.

Features of Personal overdrafts:

Lower rate of interest

Payday loan and credit cards are not viable due to their high interest rates. Whereas, in case of personal overdrafts, the interest is charged only on the amount that you withdraw.

Easy Disbursal

Since a personal overdraft is linked to your transaction account, it allows you to access additional funds whenever needed.

Higher limit

Payday loans are short-term loans and you cannot borrow more than a specified amount. Whereas, in case of personal overdrafts, you can avail a comparatively higher amount for a longer duration. Different financial institutions have different criteria for the amount that can be withdrawn. some lenders might allow you to withdraw up to thrice your monthly income, others might allow you to withdraw twice the money in your account, etc.


One of the most important features of a personal overdraft is that it does not need to be repaid through monthly instalments. You just have to pay interest for the additional amount that you withdraw from your account.

Protection of CIBIL score

A personal overdraft keeps you away from any kind of debts and thereby, it doesn’t affect your credit score negatively.

Flexibility in repayment

In payday loans, you have to pay timely EMIs. In case you fail to do so, you have to bear the late payment penalties set by the lender. However, a personal overdraft provides you flexibility while making the repayment. You can repay the principal amount whenever you have access to enough funds. You can make the repayment in fractions or at a go, according to your convenience. Therefore, repayment in case of a personal overdraft is more affordable and convenient.

Minimal documentation.

Unlike traditional loans, personal overdrafts do not require much documentation.

Now that you are well aware of the benefits of a personal overdraft, make sure that you utilize it to the fullest whenever you need urgent funds.