Learn about overdraft fees, types, and protection options. Understand how banks cover your transactions even with insufficient funds and avoid costly penalties.
An overdraft occurs when you don’t have enough money in your account to cover a transaction, but the bank pays the transaction anyway.
It can happen to just about anyone. You made a purchase, but you forgot to check the balance of your checking account, and now your account is in overdraft. As a result, your bank has charged you with an overdraft fee. What exactly is an overdraft, and how can you avoid these additional fees?
Overdraft fees Overdraft fees occur when you don’t have enough money in your account to cover your transactions. The cost for overdraft fees varies by bank, but they may cost around $35 per transaction. These fees can add up quickly and can have ripple effects that are costly.
An overdraft is when the bank allows you to spend more money than you have in your account. Learn how overdrafts work and how to avoid overdrawing your bank account.
Intraday overdraft – A debit occurs in the customer's account resulting in an overdraft which is then covered by a credit that posts to the account during the same business day. Whether this actually results in overdraft fees depends on the deposit-account holder agreement of the particular bank.
Overdraft fees are one of the most expensive bank fees. Learn more about what they are, overdraft protection options and how to avoid overdraft fees.
The American Bankers Association outlines how overdrafts happen and what you can do to prevent them.