Definition
A service that protects you from having transactions declined when you spend more than your account balance, though it may include fees.
What to consider
- Set up overdraft protection to avoid unexpected fees.
- Keep a close eye on your balance throughout the month.
- Consider linking a backup account for extra security.
Real world scenarios
- When Jared’s checking account falls short for a utility bill, overdraft coverage covers the payment to avoid a bounced check. He pays a small fee but retains good standing.
- Alison opts out of overdraft coverage to ensure transactions decline if her balance is low, helping her resist unplanned spending.
- Keenan checks his balance frequently, relying on overdraft coverage only in rare emergencies, thus keeping extra fees minimal.
Related terms
Related Playbooks
Get instant access to all our expert playbooks and 1-1 financial coaching when you join the Bolder Money community. Learn more here.
Banking & Savings
Community Banks and Credit Unions
Banking & Savings
Choosing a Checking Account
Banking & Savings
Choosing a Bank that Aligns with Values
Banking & Savings
Most Common Savings Accounts
Banking & Savings
Other Types of Saving Accounts
Banking & Savings
Choose an FDIC Insured Account
Banking & Savings
Understand Bank Account Details
Banking & Savings
Set Financial Security Goals
Banking & Savings
Set Savings Goals
