Definition
A service that protects you from having transactions declined when you spend more than your account balance, though it may include fees.
What to consider
- Set up overdraft protection to avoid unexpected fees.
- Keep a close eye on your balance throughout the month.
- Consider linking a backup account for extra security.
Real world scenarios
- When Jared’s checking account falls short for a utility bill, overdraft coverage covers the payment to avoid a bounced check. He pays a small fee but retains good standing.
- Alison opts out of overdraft coverage to ensure transactions decline if her balance is low, helping her resist unplanned spending.
- Keenan checks his balance frequently, relying on overdraft coverage only in rare emergencies, thus keeping extra fees minimal.
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