Overdraft & Lines of Credit

Credit720 is a financial consulting agency working Calgary, Edmonton, Lloydminster, Toronto, Surrey & other regions in Canada. We provide financial consulting services to our personal and business clients. Under the awareness campaign, we provide our patrons with an understanding of Overdraft and Line of Credit.

What Is Overdraft?

Most banks offer overdraft facilities to their account holders so they can spend more money than is in the account. Overdrafts could be Authorized or Unauthorized types of overdrafts.

What Is Overdraft Protection?
Overdraft protection occurs when you don’t have enough funds in your account to cover a transaction. It spares you from declined payment and potential penalties associated with it. Thus, it’s a safety net.

What Is a Line of Credit?

Banks and financial institutions offer a preset borrowing limit that is called a Line of Credit or LOC to their personal and business customers. It is open and may not be associated with your account but offers built-in flexibility. A customer can use it repeatedly.

There are different types of LOC:

1. Personal line of credit.
2. Home equity line of credit.
3. Demand line of credit.
4. Security-backed line of credit.
5. Business line of credit.

What Is an Emergency Line of Credit?
As its name suggests, it provides financial security when you face unexpected or unplanned financial needs, such as

• Home repair.
• Vehicle repair.
• Medical bills.
• Temporary income gap.

It is a low-cost option against overdraft, and you pay interest only on whatever you spend.

Pay Your Debt with a Line of Credit

If you have multiple debts, you can consolidate them using a line of credit. LOC offers flexible repayment terms and low-interest rates compared to other options.

What Are the Differences between Overdraft and Line of Credit?

Here are some significant differences between overdrafts and lines of credit.

Interest Rates:
An overdraft may have interest rates over 20% and monthly fees. You can get prime interest rates on a line of credit.

Repayment Terms:
Overdraft is devoid of fixed repayment terms. However, a line of credit needs a minimum monthly repayment, interest, and transaction fees.

Bank Account Requirement:
Overdraft is closely associated with the bank account, but you don’t need an account for a line of credit because it is separate from your account and its balance.

Approved Limit:
Overdraft has an approved limit of less than $5K, and the line of credit has $5K or more.

Overdraft & Line of Credit Help

Credit720 is an expert team of financial consultants providing complete guidance over when and how to use as well as pay line of credit and overdraft facilities available in Calgary, Edmonton, Lloydminster, Toronto, Surrey & other regions in Canada. Thus, we let you enjoy financial freedom paying debt with less interest and flexible terms. Let’s have a call to discuss this.