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Glossary

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Open-End Credit

Open-end credit is a credit agreement with a financial institution that allows a customer to repeatedly borrow funds against a preapproved credit limit to make purchases. Also known as revolving credit, the borrower is only charged for the amount that they borrow plus interest due, but not the full credit limit. Once the customer has paid back the funds prior to payments becoming due, they can once again withdraw funds up to a specific limit. Common forms of open-end credit include credit cards and lines of credit (LOCs).

Operating Subsidiary

An operating subsidiary is a company that is owned and controlled by a national bank. They operate some banking activities on behalf of national banks, including providing bank services such as loans, mortgages, and leases. The Office of the Comptroller of the Currency regulates and supervises these activities.

Overdraft

"An overdraft is a deficit in a bank account where the holder withdraws more money than is available. This extension of credit from the financial institution allows the account holder to continue withdrawing money when the account reaches zero or there are insufficient funds to cover the transaction. The drawer of the check has overdrawn their account and may be subject to interest and fees.

In the U.S., banks offer overdraft protection to customers. This covers transactions, such as ATM withdrawals, electronic transfers, checks, and purchases made with a debit card when sufficient funds are not present in the account. If the account holder has a prior agreement for an overdraft protection plan with the bank, then they will be subject to the agreed rate of interest, as long as the amount does not exceed the authorized overdraft limit. Otherwise, higher interest rates and additional fees may apply. "

Overlimit

Over-limit refers to an open-end credit account in which the account holder has exceeded the available credit amount. Creditors can charge penalty fees for customers who are over limit on their credit accounts. These vary by lender, with some not charging any over-limit fees at all. Customers can choose to opt out of paying over-limit fees. If they do, then the customer will have their card declined if there is not enough available credit for a transaction.

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