Question

Suppose your bank honors a check for which you don't have sufficient funds in your checking account. This action means that you've arranged beforehand for a/an _______ loan.

A. overdraft
B. mortgage
C. installment
D. personal

Answer 1

The correct option is A.
An overdraft is a banking arrangement, which allows a particular bank customer to continue to withdrawal money even though his account has no fund in it or it has insufficient fund. Prior agreements are often in place before a customer can have access to overdraft and the interests are often within normal range if the amount overdrawn is within the agreed overdraft limit.