Difference Between An Overdraft And Cash Credit
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.