What's overdraft protection?

Overdraft protection is a service offered by banks to help prevent your checking account from becoming overdrawn. Essentially, it’s like a safety net that kicks in when you don’t have enough money in your account to cover a transaction.

Here’s how it works: Let’s say you have overdraft protection on your account, and you make a purchase that exceeds your available balance. Instead of your transaction being declined or your account incurring hefty overdraft fees, the bank covers the difference for you. They may either transfer funds from a linked savings account, line of credit, or cover the amount themselves temporarily.

While overdraft protection can save you from embarrassment at the store or online, it’s essential to use it wisely. Banks may charge fees for this service, so relying on it too frequently can lead to additional costs. It’s always best to monitor your account balance regularly and keep track of your spending to avoid relying on overdraft protection too often.

If you’re interested in getting overdraft protection or have more questions about it, don’t hesitate to ask. I’m here to help! Feel free to share this information with friends or ask any follow-up questions you may have about managing your finances.