The amount you invest in your Fixed Deposits (FDs) provides you guaranteed returns on the maturity of the term; but if you withdraw your deposits prematurely, you lose out on interest. Under such situations where you must withdraw money to address an emergency, an overdraft(OD) facility against your fixed deposit comes as a saviour.
An OD facility is a line of credit (amount credited to the borrower) or a loan that the bank gives you against your FD. If you require access to funds suddenly, you can use the OD facility to get cash without breaking your investments. The overdraft is like a personal loan that the bank gives you against your FD in times of need. The interest on an OD is charged on the utilised loan amount only. Hence, there is no fixed monthly repayment cycle on an OD.
Usually, an overdraft is suitable for those who need the flexibility to access cash on a short notice.
Overdraft Facilities Offered by Malaysian Banks
Below are the OD facilities offered by major Malaysian banks:
- CIMB OD Facility: With the Credit Line Secured Overdraft facility by CIMB Bank, you can withdraw your funds anytime from your current account via cheque book, ATM, or at any of the CIMB Bank branches. This OD facility is available to CIMB customers against collateral such as a fixed deposit or Unit Trust maintained with CIMB.
- OCBC Overdraft Facility: OCBC provides this facility wherein you can withdraw some additional funds provided you pledge any of your assets that you have with OCBC like fixed deposits, unit trusts, shares or property. The interest rates depend on the collateral you pledge.
- Maybank Overdraft Facility: With this standby OD facility, you can get your required amount of cash without unlocking your investments with Maybank. You do not need a guarantor for this and there is no fixed repayment schedule. The minimum collateral requirement is RM10,000 and there is no commitment fee on overdraft amount less than RM250,000.
- HSBC Personal Overdraft Facility: In times of need, you can take the advantage of standby credit facility from HSBC Personal Overdraft. The interest rate for HSBC Premier customers is based on the Base Rate +2.2% p.a. and for HSBC Advance customers, the Base Rate +4.2% p.a. is the rate of interest.
Features and Benefits
The following are the common features and benefits of OD facility:
- Your OD facility provides ample flexibility.
- There is no fixed repayment schedule.
- Interests are charged only on the utilised amount.
- You can withdraw multiple times as long as you stay within your credit limit.
You need to meet the following eligibility criteria in order to get an OD facility from the bank:
- Your age has to be between 21 years and 70 years.
- The minimum pledge collateral is RM10,000.
- You need to be a Malaysian or non-resident Malaysian with a PR status.
- A copy of NRIC.
- Original certificate of collateral such as FD certificate.
- For salaried people with no variable income: last 1 month salary slip or EPF statement or most recent statement.
- For salaried people with variable income: most recent 3 months’ payslips or EPF statement or 3 months’ bank statement.
- For self-employed person, consecutive six months bank statement is required.
Fees & Charges
Overdraft facilities have certain charges attached to them. The table shows the fees and charges.
|Stamp Duty||Based on Stamp Act 1949|
|Commitment||For RM250,000 and above, 1% p.a. is charged for the unused portion.|
Q: What happens if I am unable to repay the OD to my bank?
A. If you are unable to pay back the overdraft amount to the bank, then the bank can liquidate your investments.
Q. What is the percentage of finance margin for Personal OD secured by fixed deposits?
A. Overdraft facilities have a high margin of financing of up to 100% of the secured fixed deposit value.
Q. How do banks calculate the interest rate on OD?
A. The interest is charged based on the Base Lending Rate and is calculated on the daily OD balance utilised amount.
Q. What is the interest rate in the Credit Line Secured Overdraft facility with CIMB?
A. In CIMB’s OD facility, the interest rate for personal OD that is secured by FD is Base Rate + 0.85%p.a. The interest rate for personal OD secured by multiple collateral is Base Rate + 1.35%p.a.
Q. What is the maximum and minimum OD limit for HSBC Personal Financing?
A. The maximum OD limit is RM5 million while the minimum is RM10,000.