Are you a salaried person? Know everything about salary overdraft


If yes, then in case of urgent financial needs, you do have one tool that can turn out to be helpful. You may be unaware of it. This tool is non-other than salary overdraft.

What is salary overdraft?

On your salary account, you can avail credit. You can withdraw the needed money over and above the balance available in your salary account, it is considered an overdraft facility. Salary overdraft facility is provided by limited banks and its benefits may vary from bank to bank.


  1. For getting a salary overdraft facility, an individual’s credit score, credit history, and employer’s profile are examined.
  2. Different banks offer different credit limits depending upon the type of account and bank.
  3. Eligibility criteria differ from bank to bank.
  4. In most cases, an individual gets a credit facility ranging from one to three times the monthly net salary of the account holder.
  5. The credit facility may be restricted to 80-90% of the monthly net salary, depending upon the bank.
  6. Processing charges may or may not be applicable depending upon the bank.


  1. Interest will have to be paid on only the utilized amount.
  2. As per your convenience, you can repay the money in a lump sum or installments.
  3. Pre-payment charges are not applicable.
  4. Minimal documentation is required.
  5. Instant approval is available.
  6. It can save your EMI or SIP from bouncing in case of insufficient balance in your salary account.
  7. You can close it whenever you wish to, without any pre-closure charges.


  1. In case of missed payments, penalties will be charged.
  2. It can be considered an expensive credit option.
  3. The interest rate per month varies from 1-3% depending upon the bank.
  4. Exclusive offers are not available.
  5. Any rewards are not available.
  6. The cash back facility is not there.

When to use it?

You can use the overdraft facility when the date of your SIP or EMI is coming near and you don’t have the required balance in your account. Further, overdraft has its advantages, but if the comparison is made between credit card and salary overdraft, then it(overdraft) turns out to be less beneficial.

Unlike credit cards, here interest-free period is not provided to pay your debt. In case of missed payments, penalties will be levied and along with that, it will also impact your credit score.

It is advisable to use this facility only in case of emergency and with proper caution. Terms and conditions should be well understood before going for it.

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