Can overdraft accounts allow cash withdrawals?

Overdrafts are one of the short-term financial solutions that help customers proactively manage their funds when unexpected expenses arise. However, many people still wonder whether the overdraft limit can only be used for payments or if cash can be withdrawn. This article will clarify the nature of overdrafts, common forms, and how to use overdraft funds correctly according to bank regulations.

1. What is an overdraft loan? Common types

According to the regulations of the State Bank of Vietnam and banking credit practices, vOverdraftThis is a form of credit that allows customers to spend or withdraw money exceeding the actual balance in their checking account, within a pre-approved credit limit set by the bank. Interest only accrues on the actual amount used, not on the entire approved credit limit.

Depending on financial conditions and intended use, overdraft loans are currently implemented in two main forms:

1.1. Unsecured overdraft loan (No collateral required)

This is a form of overdraft that does not require collateral, granted based on the customer's creditworthiness, repayment history, and stable income, and is common among customers who receive their salaries through bank accounts.

• Reference interest rate2026: approximately 12.9% - 18% per year
• Limit: typically equivalent to 3-5 times monthly income.
• Suitable for: individuals needing short-term spending, bill payments, or salary advances.

This option has the advantage of a quick and simple procedure; however, the interest cost is higher compared to secured overdrafts.

1.2. Secured overdraft loan (with collateral)

With this method, customers use collateral or mortgages such as savings accounts, real estate, cars, or bonds to obtain an overdraft limit.

• Reference interest rates for 2026: 5% – 10% per year
• Credit limit: based on the value of the collateral, it can be up to billions of VND.
• Suitable for: individuals or businesses requiring significant capital for production, business operations, or high-value expenditures.

The advantage of this option is a higher credit limit and more favorable interest rates.

An overdraft allows you to spend more than your account balance within a set limit.approve.

2. Can I withdraw cash from an overdraft account?

According to the regulations of each bank, customers may be allowed to withdraw cash from their overdraft limit. Besides being used for cashless payment transactions.

Customers can withdraw overdraft funds through the following methods:

• Withdrawing money at an ATM: use your debit card to complete the transaction as usual, including in the following cases: account A negative balance has been incurred within the approved overdraft limit.
• Transfer: Transfer funds from your overdraft limit to another account via your digital banking app, then withdraw the money.
• At the teller counter: present your identification documents so the bank can assist in disbursing cash from your overdraft limit.

Some things to note when withdrawing overdraft funds.

• Interest is calculated immediately: Overdraft interest begins accruing from the moment the customer uses funds exceeding their actual balance.
• Transaction fees: Some banks may charge higher fees for cash withdrawals from overdraft limits compared to regular transactions.

Therefore, customers need to consider their usage needs and repayment plan to control the resulting financial costs.

Customers can withdraw cash directly from their overdraft limit.

3. Conditions and Application Documents

To be considered for an overdraft limit by the bank, customers need to meet a number of basic conditions as stipulated:

• Age: 18 years and older, with full legal capacity as stipulated by law.
• Income: Having a stable source of income; receiving salary through a bank account is an advantage during the application process.
• Credit history: No bad debt at the time of application.

An overdraft loan application typically includes:

• Application form for overdraft limit (as provided by the bank).
• Valid national identity card or passport
• Proof of income documents such as employment contracts, salary statements for the last 3-6 months.
• Documents related to collateral for secured overdrafts.

Having complete documentation helps shorten the time required for assessment and approval of credit limits.

The documents required for an overdraft loan include the national identity card, application form, and proof of income.

4. Consequences of overdue overdrafts

Overdrafts are short-term loans, so failure to make timely payments can lead to various financial risks:

• Penalty interest charges apply: Penalty interest rates are typically higher than the regular interest rate, potentially reaching up to 150%.
• Impact on credit history: Overdue debts are recorded in the CIC system, reducing access to credit in the future.
• Handling of collateral: Applicable to overdrafts secured by collateral.
• Legal risk: The bank mayApply corrective measures in accordance with the law and the signed contract.If the customer fails to fulfill their debt repayment obligations on time.

Given the potential risks associated with overdue overdrafts, choosing a bank with clear policies, transparent management tools, and timely support will help customers better control their finances. SeABank is one of the banks that implements flexible overdraft solutions, supporting customers in proactively managing their short-term cash flow.

• Meeting diverse needs: From personal expenses to supplementing working capital for business operations.
• Streamlined procedures: Clear approval process, allowing customers to quickly access their credit limit.
• Convenient management: Customers can easily track their credit limit, outstanding balance, and interest expenses on the digital banking app.

SeABank's overdraft product is flexible, easy to monitor, and easy to manage.

Hopefully, through the above article, customers have gained a better understanding of overdraft loans as well as important notes when withdrawing money and repaying the limit on time. If you need to apply for an overdraft limit or require detailed advice on short-term financial solutions, please contact SeABank directly for quick and accurate support.