An
overdraft occurs when money is withdrawn from a
bank account and the available
balance goes below zero. In this situation the account is said to be "
overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then
interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then
additional fees may be charged and higher interest rates may apply.