Overdraft Protection

Overdraft protection is a service offered by banks that protects you from having your transactions declined or returned due to insufficient funds in your chequing account.

With overdraft protection, the bank will automatically transfer funds from another account or extend a line of credit to cover the overdraft amount. This can help you avoid non-sufficient funds (NSF) fees, which can be costly.

However, overdraft protection typically comes with its own fees and interest charges, so it’s important to understand the terms and conditions before signing up. Many banks have different types of overdraft protection, with varying costs.

• Related Terms: Bank Account, Fee, NSF, Banking, Chequing Account