An overdraft allows the individual to continue withdrawing money even if the account has no funds in it or not enough to cover the withdrawal.
Basically, overdraft means that the bank allows customers to borrow a set amount of money.
With an overdraft account, your bank covers checks that would otherwise bounce and get returned without payment. As with any loan, you pay interest on the outstanding balance of an overdraft loan. Often, the interest on the loan is lower than credit cards.