Overdraft
Definition
Drawing more money from your account than you have, going negative. Banks allow overdrafts (for a fee, typically $25-35 per overdraft). Overdraft protection links to savings or credit line to prevent going negative.
Why It Matters
Overdraft fees are expensive and avoidable. A single overdraft ($26 fee) is worse than a year of FDIC insured savings interest. Overdraft protection costs nothing. Check boxes to enable it.
Example
Account has $200. Write check for $250. You're overdrawn by $50. Bank charges $35 overdraft fee, leaving you at -$85 (owe bank $85). Next transaction incurs another fee. Overdraft fees cascade quickly.
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Pulsafi definitions are sourced from primary regulatory and industry references. See our methodology and data sources.