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What Is Overdraft Protection?

Back to Basics: Use Your Overdraft Protection Wisely

Sometimes, we pretend things are there when they're actually not — like a connection with the guy who works in the office across the hall or positive cash flow in our bank accounts. An account balance that's dangerously flirting with zero is at risk of accruing heavy fees and could put you even further behind on the quest to get your finances on track.

Many checking accounts come with the option of overdraft protection, which means a check won't bounce if you write it for more than your account's balance. Different overdraft protection plans come with varying limits, and using overdraft protection is like borrowing money from the bank — with high interest rates in tow. So why use it at all?

I've never heard of a bank not charging a high penalty for bouncing a check, but you can end up paying less by using overdraft protection and quickly repaying the bank. Be sure you're aware of all possible charges before adding this feature to your account and know your bank may take away your privileges if your account is constantly dipping into the negative. Also, if you ever want to use your bank to get a loan, habitually relying on overdraft protection would give the impression that you may not be a credit-worthy customer.


Modus-Vivendi Modus-Vivendi 8 years
Same, Spectra. I just consider $1,000 to be zero, so if I "overdraft," my balance goes down to $900, not actually below zero. I don't keep track of checks I write, so I just leave a cushion.
Anne-B Anne-B 8 years
I used to do this, and get charged by my bank. Now at a credit union there is no fee, just repaying what I was over. And I'm getting better at not going over to begin with.
poizenisxkandee poizenisxkandee 8 years
totally just got screwed on this one. never doing it again. ever.
Spectra Spectra 8 years
I don't have overdraft protection on my account, only because I always keep a $500 cushion in it so there are no surprises. But on my old account in college, I accidently had an overdraft once and they charged me a ton of fees...the actual overdraft was only like $30 but I had to pay upwards of $300 in fees. I decided just to never overdraw my account ever again to prevent that from happening instead of doing the "overdraft protection" thing.
aimeeb aimeeb 8 years
I never do this.
ilanac13 ilanac13 8 years
this is very true. i guess with my checking account, i have a secured loan or something attached as overdraft protection, so i have a REALLY LOW interest rate if i were to go over. it's really good to know that i won't run into a problem if i accidentally bounce a check - on both ends, with the check not going through or paying out my rear end in fees. my fiance still hasn't learned the value of overdraft protection, even though he deals with that on a monthly basis. he's been unemployed for a while now and forgets that he has things that are directly debited from his account, so he's charged like $60 every month in fees when it bounces. i've told him time and time again that he needs to fix that or to let me know what $$ he needs so he doesn't over draw his account, but men are stubborn aren't they?
Carrie-Sue Carrie-Sue 8 years
Exactly. Not enough people understand this. Depending on the bank, you could find yourself in some serious debt, being fined for every minor transaction while your below $0. Be careful.
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