Advantages and disadvantages of bank overdrafts

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  • Created by: Zoe
  • Created on: 03-06-13 13:22

Advantages and disadvantages of bank overdrafts

Advantages

  • Easy to organise
  • Only pay interest on what you borrow
  • Flexible

Disadvantages

  • Interest rates are flexible so difficult to forecast and budget accurately
  • Interest rates will be higher than bank loans
  • More expensive in the long run

Evaluation

Bank overdrafts are good quick sources of finance that are quick to set up. This makes them useful in terms of cash flow problems when finance is needed immediately.

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