Overdraft

An overdraft occurs when withdrawals from a bank account exceed the available balance, resulting in a negative balance. Banks may allow overdrafts up to an agreed limit, typically for a fee.

Overdraft protection is a service that links your checking account to a savings account, credit card, or line of credit to cover transactions when your balance is insufficient. Without protection, transactions may be declined or incur NSF fees.

Related Terms

NSF

Non-Sufficient Funds

NSF refers to the status of a checking account that does not have enough money to cover a transactio...

Balance

A balance is the amount of money in a bank account at any given time. Banks typically report both th...

Checking Account

A checking account is a deposit account held at a financial institution that allows withdrawals and ...

Available Balance

Available balance is the amount of money in an account that can be immediately withdrawn or used for...

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