Overdrafts

An overdraft is when you don’t have enough money in your checking account and your financial institution allows you to overdraw (or go into the negative). You will be charged a fee but you will have access to money when you need it. Then you have to bring your account positive (put money back in) within a certain time frame to be in good standing with your financial institution.

If you opt-in to overdraft protection and use your debit card to make a purchase without enough money in your checking account:

• Money will pull from your savings account and your financial institution might charge you a small fee. You will be able to make your purchase.
• If you don’t have enough money in your savings account then you will overdraft your checking account and be charged an overdraft fee, but you can make your purchase.
• Some institutions offer a line of credit or linked credit cards to cover overdrafts. You may have to pay a fee when the credit line is tapped, and you will owe interest on the amount you borrowed, but you can make your purchase.

If you don’t opt-in to overdraft protection, when you try to make a purchase when there isn’t enough money in your checking account, the transaction will not be approved.

For more information, check out Know Your Overdraft Options.

TIP: It is important to talk to your financial institution and find out their overdraft protection options so you know what to expect.