Definition of Overdraft protection:
NSF (or insufficient funds) transactions are not covered by the bank and can be expensive and disruptive. Non-preauthorized transactions made with a check and automated clearing house (ACH) withdrawals are returned unpaid, a practice known as bouncing. Most banks charge hefty overdraft and NSF fees (between $30 and $35, on average) for accounts that do not have sufficient funds. What's more, not only can the bank refuse payment and charge the account holder an NSF fee, but a penalty or fee may also be charged by the merchant for the failed transaction.
Credit arrangement under which a bank automatically extends a short-term loan to cover a checks amount that exceeds the check writers (drawers) account balance. This arrangement ensures the check is not returned (bounced) due to not sufficient funds (NSF) which may call for a criminal charge.
Overdraft protection is an option offered in bank accounts that prevents check, ATM, or debit card transactions, as well as wire and electronic transfers, from causing the account's balance to fall below zero and triggering an overdraft fee or a non-sufficient funds (NSF) fee. With overdraft protection, a bank will cover a shortfall and charge for the service with an overdraft fee, or “courtesy fee,” so the transaction goes through successfully.
How to use Overdraft protection in a sentence?
- There may be heavy fees and interest associated with overdraft protection, depending on the kind of linked account used.
- Overdraft protection is a guarantee that a check, ATM, wire transfer, or debit card transaction will clear if the account balance falls below zero.
- Overdraft protection lines of credit can range from $250 to $5,000 and above.
Meaning of Overdraft protection & Overdraft protection Definition