Overdrafts and credit cards offer different types of credit each with their own advantages and disadvantages. The use of either a credit card or an overdraft facility will depend completely on the manner in which you intend to use the credit as well as the set of advantages and disadvantages you are most comfortable with. Overdrafts are linked to a current account, whist a credit card gives you access to credit on a completely separate account. The interest rates payable on these two options are also likely to differ. Fees for having an overdraft facility differ from bank to bank however a cost will be incurred once the overdraft facility is being actively used. Credit cards offer an interest free period whereas overdrafts do not. This means that if you pay your statement balance on or before the due date every month you could get up to 55 days interest free. Overdrafts on the other hand charge interest from the date of the transaction regardless of whether you pay your balance due on time. Note that credit cards often have a set payment plan e.g. 5% of capital plus fees and interest whilst overdrafts often only require that the account holder deposit their salary into the cheque account every month.
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