What defines a daylight overdraft?

A daylight overdraft is characterized by a temporary situation in which an account goes into overdraft due to a timing mismatch between deposits and withdrawals, commonly seen during the processing of transactions. This phenomenon happens when transactions are initiated, such as payments or transfers, that exceed the available balance, but the funds associated with incoming credits have not yet cleared.

Understanding daylight overdrafts is crucial in the context of payment systems, as they highlight the importance of timing in fund availability and cash flow management. Unlike a permanent overdraft, where an account is consistently overdrawn, a daylight overdraft is expected to be resolved by the end of the business day when the related funds clear, returning the account to a positive balance.

The other options describe different financial situations or products that do not align with the specific definition of a daylight overdraft. Option A reflects a lasting financial state, while option B relates to issues with loan sufficiency, and option D pertains to bank offerings rather than account management scenarios.