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

Reviewing: Banking & Savings (25 of 39)
Topics
Mia's avatar
Hey there! I’m Mia. Have questions about Overdraft Coverage?
Mia's avatar
I’ve got a few ideas you can put into action today. Ready to dive in?