Question

What is the key difference between Cash Credit and Overdraft?

Options

• Cash Credit is short-term, while Overdraft is long-term.

• Cash Credit is secured, while Overdraft is unsecured.

• Cash Credit is for businesses, while Overdraft is for individuals.

• Cash Credit is a credit facility, while Overdraft is a loan facility.

Answer 1

Cash Credit is secured, while Overdraft is unsecured.

Explanation:

Cash credit is a secured working‑capital facility granted against stocks/receivables; an overdraft lets current‑account holders draw beyond their balance and is generally an unsecured short‑term advance (banks may sometimes require security).