Difference between Cheque and Bank Overdraft | ||
Basis of Difference | Cheque | Bank Overdraft |
Meaning | It is an unconditional order directing the bank to pay a mentioned amount to a certain person. | It is a facility given to a current account holder to withdraw amount more than what he/she has in his/her account. |
Charges | There are no charges. | Interest is charged. |
Eligibility | All account holders are eligible for this facility. | Only current account holders can enjoy this facility. |
Dishonour | It can be dishonoured. | It can never be dishonoured. |
Fee | No fee is charged on the issue of a cheque. | A small amount of fee is charged on the issuance of draft. |
Reliability | A cheque might not get cleared due to numerous reasons like mismatch of signature and unavailability of funds. | As it is issued only after the receipt of payment, it is more reliable. |