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Difference Between An Overdraft And Cash Credit

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Apr 14th, 2011
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Difference between an Overdraft and Cash Credit
The main points of difference between an overdraft and cash credit are as follows.

(1) Overdraft is a temporary arrangement and is usually for a very short period. The cash credit on the other hand is a borrowing on a comparatively long term and on regular basis.

(2) Overdraft facilities are allowed in current account only. Cash credit needs opening a separate cash credit account.

(3) The rate of interest on overdraft is relatively lower but on cash credit it is higher.

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