What are the advantages and disadvantages of overdrafts?

Answer 1

One disadvantage to overdraft is the fact that it is automatic and you can use the service without knowing it. Some people would prefer to be declined. An advantage to using the service is the fact that you can extend how far your cash goes using it.

Answer 2

An overdraft is a facility provided by one's banker to meet any emergency business needs for an account holder, like a temporary loan. The credit card system is based on this principle only. If it is used without discretion then one would spend more than what he needs. But for small business people or those who are in need of short term loans, this facility is good. The prompt repayment of the overdraft enhances the credibility of the person using the overdraft system.