Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

What is Overdraft Protection?


According to Investopedia, an overdraft is “an extension of credit from a lending institution when an account reaches zero.” An overdraft allows the individual to continue withdrawing money even if the account has no funds in it.

Basically, if you make a purchase but don’t have sufficient funds to cover it, your bank will still allow you to draft the funds. However, any deposits you make after that will go toward getting your account out of the negative, and you will likely incur a fee from your bank.

What are Overdraft Programs?

There are three types of overdraft programs that are typically offered at most banks:

1. Opting out — Just because your bank offers overdrafts doesn’t mean you have to use them. You can always opt out of the program, which will mean any time you try to make a purchase and do not have enough funds to cover it, your transaction will be rejected. This helps you avoid overdraft fees, but your bank may still charge an insufficient funds fee.

2. Overdraft transfer — Overdraft transfers allow you to link your checking account to another checking account or savings account and sometimes a line of credit or credit card. With this program, your bank will automatically transfer the funds from your linked account into your checking account if you overdraft.

3. Overdraft coverage — With overdraft coverage, you are basically taking out a short-term loan the bank will use to cover your overdraft. If you overdraft, your bank will loan you the funds and charge you a fixed fee.

First Bank* Offers Overdraft Protection

With First Bank, you can protect your account from overdraft fees with Ready Cash, a line of credit that automatically transfers funds into your checking account in the event of an overdraft. Every First Bank checking account comes with the added perk of Ready Cash, so you can be confident you are protected. Learn more about Ready Cash at a First Bank location near you.


*Member FDIC. 

———

Source:

http://www.investopedia.com/terms/o/overdraft.asp

Trending Topics

Personal Loan Rates In Sanford, NC

If you live in Sanford, NC, and are looking for some of the best personal loan rates in the area, your local First Bank can help. We offer personal loans with flexible…

Your Community Bank in North Carolina

Are you wondering how your community bank stacks up against some of the national banks in North Carolina? Well, don’t believe that community banks versus big banks comparisons are always…

What Are 15 Year Mortgage Rates?

What are 15-year mortgage rates? It seems like a long time doesn’t it? But when you really think about it, 15 years is nothing. Think of all the things you’ve…

Where To Get 20 Year Mortgage Rates

When you’re ready to buy a house, it’s easy to get caught up in all of the excitement of shopping and forget about the financial part. Once you’ve found the…

Best Small Business Bank in Wilmington, NC

If you're looking for the best small business bank in Wilmington, NC, look to your local First Bank. Our business banking services are designed to meet the needs of businesses of…

College Savings Account in Wilmington, NC

Whether you’re a parent looking to put away money for your child’s university tuition or a high school student trying to save some spending money for college, a savings account…

How to Apply for a Small Business Loan in Florence, SC

Every successful business began with an idea. In most cases, that idea was followed by asking the common question of how to apply for a small business loan. In Florence,…

Best Savings Account Rates in Albemarle, NC

The Simple Dollar lists 100 Great Tips for Saving Money for Those Just Getting Started. At the top of the list? Finding the best savings account rates. In Albemarle, NC,…

How to Get a Personal Loan in Asheville, NC

The average credit card APR in October of 2014 was 15.07%. With such rates, sometimes a personal loan is a more cost-efficient way of getting your hands on the money…

Best Checking Account Rates In Albemarle, NC

If you live in Albemarle, NC, you can enjoy some of the best checking account rates in the state by banking with First Bank. We have two branches in Albemarle located…