Definition
When your bank account balance goes below zero. Banks may charge overdraft fees, so it’s best to track your balance or set up overdraft protection.
What to consider
- Regularly check your statements to catch errors early.
- Use them as a tool to monitor your spending habits.
- Organize them with your other financial records for tax time.
Real world scenarios
- Gabriel accidentally overdraws his account after forgetting an automated subscription charge. He quickly transfers money to avoid additional fees.
- Paola opts into overdraft protection linked to her savings, preventing declined transactions during tight weeks.
- Sophia monitors her account daily to avoid repeated overdrafts, setting low-balance alerts that warn her beforehand.
Related terms
Related Playbooks
Get instant access to all our expert playbooks and 1-1 financial coaching when you join the Bolder Money community. Learn more here.
Banking & Savings
Align Your Banking with Your Values: A Complete Guide
Banking & Savings
Community Banks & Credit Unions: Your Guide to Value-Based Banking
Banking & Savings
The Ultimate Guide to Choosing Your Perfect Checking Account
Banking & Savings
Choose Your Perfect Savings Account: From Basic to High-Yield
Banking & Savings
Travel Planning System
Banking & Savings
Smart Banking Secrets: Master Your Accounts & Save Money
Banking & Savings
Strategic Savings Planning
Banking & Savings
Financial Security Planning
