Which statement best describes the usefulness of an overdraft for an unemployed person?

Which statement best describes the usefulness of an overdraft for an unemployed person?

• A. Overdrafts provide a flexible short-term borrowing option, useful when income is uncertain.
• B. Overdrafts will inevitably lead to long-term debt and high interest.
• C. Overdrafts do not rely on the current account data.
• D. Overdrafts guarantee repayment automatically.

Answer: (A)

The main idea here is that an overdraft provides a flexible, short-term borrowing option tied to a current account, which is especially useful when income is uncertain. For someone who is unemployed, this flexibility can help cover essential expenses in the short run without needing a formal loan, and it is intended to be repaid quickly as income comes in. The other statements don’t fit: overdrafts aren’t a guaranteed repayment and usually incur costs; they are arranged based on the current account and the bank’s assessment, not independent of it; and they don’t automatically guarantee repayment.

The main idea here is that an overdraft provides a flexible, short-term borrowing option tied to a current account, which is especially useful when income is uncertain. For someone who is unemployed, this flexibility can help cover essential expenses in the short run without needing a formal loan, and it is intended to be repaid quickly as income comes in. The other statements don’t fit: overdrafts aren’t a guaranteed repayment and usually incur costs; they are arranged based on the current account and the bank’s assessment, not independent of it; and they don’t automatically guarantee repayment.