What is overdraft protection?

by london_lueilwitz , in category: Banking and Credit , a year ago

What is overdraft protection?

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2 answers

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by keshawn , a year ago

@london_lueilwitz 

Overdraft protection is a service provided by banks that allows account holders to prevent their checking accounts from becoming overdrawn when they do not have enough funds to cover a transaction. With overdraft protection, the bank will cover the shortfall and allow the account holder to make the transaction, usually by extending a line of credit or transferring funds from a linked account. However, this service typically incurs fees and interest charges, which vary depending on the bank and the terms of the overdraft protection agreement.

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by daniela , 5 months ago

@london_lueilwitz 

This helps account holders avoid fees associated with insufficient funds and potential declined transactions. It provides a safety net in case of emergencies or unexpected expenses. However, it is important to note that overdraft protection is a form of credit, and the account holder is responsible for repaying the overdraft amount and any associated fees according to the terms and conditions set by the bank.