Daylight Overdraft

AAA

DEFINITION of 'Daylight Overdraft'

Occurs when a clearinghouse bank issues a payment during the day that is in excess of the originator's reserve account balance. Daylight overdrafts must be covered by the end of the business day.

INVESTOPEDIA EXPLAINS 'Daylight Overdraft'

In order to encourage banks to manage and reduce potential default risks, the Federal Reserve Board assesses a charge for daylight overdrafts.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Overdraft Cap

    The maximum dollar limit that a bank will send to another financial ...
  3. Overdraft

    An extension of credit from a lending institution when an account ...
  4. Reserve Requirements

    Requirements regarding the amount of funds that banks must hold ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Clearing House

    An agency or separate corporation of a futures exchange responsible ...
Related Articles
  1. The Treasury And The Federal Reserve
    Bonds & Fixed Income

    The Treasury And The Federal Reserve

  2. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. How The Federal Reserve Manages Money ...
    Personal Finance

    How The Federal Reserve Manages Money ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center