An overdraft is a financial facility provided by a bank where a person is allowed to withdraw more money from their bank account than what they actually have available. The key difference between an overdraft and other types of loans is that it is a short-term borrowing arrangement, typically used for a few days or weeks.

There are two main types of overdrafts:

1. Authorized overdraft: This is an agreed-upon borrowing limit that the bank provides to the account holder. The bank charges interest on the amount borrowed, and there may be additional fees associated with it.

2. Unauthorized overdraft: This occurs when an account holder withdraws more money than they have in their account without prior agreement with the bank. This type of overdraft usually incurs higher fees and interest rates, and the bank may charge additional penalties.

The key differences between an overdraft and other forms of borrowing, such as loans or credit cards, are:

1. Flexibility: Overdrafts provide account holders with a flexible way to borrow money, as they can dip into their overdraft as needed and repay it when they have funds available.

2. Short-term nature: Overdrafts are designed to be short-term borrowing solutions, typically used for emergencies or temporary cash flow issues. Loans and credit cards, on the other hand, are usually for longer-term borrowing needs.

3. Interest rates and fees: Overdrafts often have higher interest rates and fees compared to other forms of borrowing, making them less cost-effective for long-term borrowing.

It is important to note that the terms and conditions, as well as the fees and interest rates, associated with overdrafts can vary between banks, so it is essential to carefully read and understand the specific terms of your overdraft facility.

A favorable bank balance is a balance from a bank statement that shows credit and is going to be debited in the bank account. Unfavorable is the opposite of this. If the given balance is positive, then it is favorable. If it is negative, then it is known as "overdraft."