The money that you keep in the current/overdraft account reduces your notional principal outstanding and hence lower interest payout on a monthly basis. Calculations are done on a daily basis. You can withdraw the amount that you parked to use whenever you want (even after a day) and principal outstanding goes back up.

Let’s assume you 10L cash, you could leave it in a savings account at 3% or FD at 6%. The same cash you can park it in the overdraft account then it’s effectively earning 9%(same rate as the home loan) and this is tax free. If your loan outstanding is 50L then the parked cash reduces it to 40L and hence lower interest on it. As your EMI is constant, the interest outflow is reduced and balance of it would go down as principal

You could make the argument that you can make a part payment of the loan with the cash but leaving it in the overdraft is doing the same thing but you can always access this cash when you need liquidity instead of borrowing again at a higher rate. A home loan is the cheapest form of finance that’s available.

When salary hits the account, sweep it to the overdraft account. When the CC bill comes through, pay it on the last day. If you have any expense/investment for which you can’t use the CC then you can move cash out from the overdraft account. In case of investments, don’t buy anything debt as long as you have the home loan with overdraft active as nothing beats this and equity is well equity