Intraday Credit: Understanding Short-Term Account Overdrafts

Intraday credits refer to short periods during which an account may be overdrawn.

An intraday credit, also called a daylight credit, is a credit lasting less than one day given to a person or a business. These credits are typically given by banks and are free of interest.

Intraday

Intraday refers to something happening in the same day. If a business makes a payment out of an account in the morning and does not have enough funds to cover it, the business can utilize the bank's intraday credit. This means that as long as funds are deposited into the account by the end of the day, the bank is willing to cover the charge made in the morning.

Pre-Authorized

In order for customers to qualify for intraday credit, a financial institution performs credit reviews. Only customers with good credit qualify for intraday credit. Limits vary by customer and financial institution.

Notification

Many banks prefer that their customers notify them ahead of time if they expect a large overdraft. This can prevent the transaction from being rejected. Banks have different policies and terms regarding intraday credits.