Distinguish between the following: Cheque & Bank Overdraft

Distinguish between the following:
Cheque & Bank Overdraft

ANSWER:


Basis of Difference
Cheque
Bank Overdraft
Meaning
It is an unconditional order directing the bank to pay a mentioned amount to a certain person.
It is a facility given to a current account holder to withdraw amount more than what he/she has in his/her account.
Charges
There are no charges.
Interest is charged.
Eligibility
All account holders are eligible for this facility.
Only current account holders can enjoy this facility.
Dishonour
It can be dishonoured.
It can never be dishonoured.
Fee
No fee is charged on the issue of a cheque.
A small amount of fee is charged on the issuance of draft.
Reliability
A cheque might  not get cleared due to numerous reasons like mismatch of signature and unavailability of funds.
As it is issued only after the receipt of payment, it is more reliable.