Both overdraft and cash credit refer to lines of credit with a lender. These terms can also refer to the type of bank accounts that allow you to withdraw more funds than you actually have on deposit – hence, the words "over" and "credit." Both are used to prevent checks from bouncing or debit cards from being declined when there are insufficient funds in checking accounts.

At the simplest level, overdraft and cash credit are just forms of borrowing. The institution allows you to withdraw funds that you do not have, usually in small amounts. The primary differences between these forms of borrowing is how they are secured and whether the money is lent out of a separate account.