New Delhi, May 21 -- Sometimes, we require extra funds to cover diverse financial needs, making our borrowing patterns vary. Consequently, a clear understanding of different credit facilities-like overdrafts and personal loans-is crucial. This knowledge empowers you to make an appropriate choice tailored to your financial situation, immediate needs, and repayment capabilities.

An overdraft is a credit facility generally offered by banks and financial institutions, mainly to business owners, to manage short-term financial requirements related to their operations.

Under this facility, borrowers are allowed to withdraw money from their savings or current account even if the account balance is insufficient, up to a pre-approved limit. The o...