Overdrafts are a type of loan that allows people to withdraw more money from their bank account than they have in it. This type of loan is usually used when people need access to money quickly and don't have the funds available in their account. The term 'overdrafts' is derived from the fact that the amount withdrawn exceeds the amount of money in the account. Overdrafts can be a useful tool for managing finances, but they can also lead to high fees and interest rates if not managed properly.