Overdraft protection


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Overdraft Protection

The payment by a bank of a purchase by a client when that client's transaction results in an overdraft (which occurs when the account balance goes below zero). This allows the client to purchase whatever good or service led to the overdraft. The bank may assess a hefty fee for overdraft protection.

Overdraft protection.

Overdraft protection is a bank line of credit. It's activated if you have insufficient funds to cover a check written against your account, up to a predetermined limit.

As with other forms of credit, you are charged interest once the line of credit is activated. If you qualify for it, overdraft protection can help you avoid the fees, inconvenience, and embarrassment of accidentally bouncing a check.

However, because banks often charge relatively high interest rates for the service, it's best to repay the transferred amounts quickly. And some banks charge a monthly fee for having overdraft protection linked to your account, even if you don't use it. Others may not offer the protection on low-cost accounts.

References in periodicals archive ?
(34) The interim final rule prohibited financial institutions from charging fees for transactions that overdraw an account by use of a debit card at an ATM and point-of-sale, unless the consumer opts-in to an overdraft protection program.
Such treatment is consistent with the financing nature of overdraft protection. Consider Advance Auto Parts, Inc., for example.
don't care about free overdraft protection, oblivious
Unlike traditional overdraft protection, this product includes the bounce protection amount in the customer's available balance.
Money is getting flushed out of Alan's low-six-figure account faster than you can say "overdraft protection," his credit is shot, his landlord evicts him, he's carjacked and his furniture is repossessed.
Other services include investment accounts and individual retirement accounts; vehicle, home, real estate and lifestyle loans; direct deposit; Easy Pay bill payer and overdraft protection; and much, much more.
For the same reasons, the individual should arrange for a line of credit or overdraft protection at his bank before he quits.
Maybe I got a little sloppy because I believed I had something called "overdraft protection," my reward for maintaining a minimum balance with the bank.
Since its launch in 2013, MoneyLion has amassed more than five million members and has earned its customers' trust with new mobile online banking and managed investment services that offer a one-of-a-kind cashback rewards program, no-fee checking account, overdraft protection, and loans funded in 15 seconds.
The plaintiffs also claimed the bank failed to inform its customers the fees could be avoided if they opted out of overdraft protection.
MLA coverage now applies to all forms of open- and closed-end credit covered under the Truth in Lending Act (excluded: residential mortgages, federal student loans, traditional DDA overdraft protection, most auto loans except "covered" loans).
JMFA alleged in a federal lawsuit that the $91 million First Imperial Credit Union was secretly and illegally using the consulting firm's overdraft protection solution.