Overdraft vs cash credit: how they really differ
Both revolve, both charge interest on utilisation. The security and the drawing power differ.
4 min read
What you need to know
A cash credit limit is secured primarily by hypothecation of stock and book debts, and the drawing power is recalculated each month from your stock statement. An overdraft is usually secured by a fixed asset — property, an FD or securities — and the limit stays constant through the year.
Continue your research
Use this guide alongside our product details and eligibility criteria before choosing a lender.
Detailed comparison
| Factor | Overdraft | Cash credit |
|---|---|---|
| Primary security | Property, FD, securities | Stock and book debts |
| Limit behaviour | Fixed for the year | Varies with drawing power |
| Monthly reporting | Not usually required | Stock and debtor statement mandatory |
| Best suited to | Service businesses, individuals | Traders and manufacturers |
Frequently asked questions
What is the main takeaway from “Overdraft vs cash credit: how they really differ”?
Both revolve, both charge interest on utilisation. The security and the drawing power differ.
What should I check before acting on this comparison charts guide?
The guide includes a od vs cc comparison covering Factor, Overdraft, Cash credit.
Can the information in this guide guarantee loan approval?
No. It is general educational information. A bank or NBFC makes the final decision after checking your credit profile, repayment capacity, documents and the applicable product policy.
How can iFINTRUST help after I read this guide?
An iFINTRUST advisor can review your requirement, explain the documents normally requested and help you compare suitable lending options before you apply.