An overdraft is a banking service that allows you to spend more money than you have in your bank account, up to a specific limit set by the bank.

Key points to remember:

• It acts as a short-term loan from your bank.
• You are usually charged interest based on how much extra money you use.
• It is useful for managing temporary cash flow problems, such as paying a bill before your next paycheck arrives.
• It can become expensive if you do not pay the money back quickly.