Summary: Overdrafting occurs when spending more than available balance, leading to fees and potential consequences.
From Yahoo Finance: 2025-04-21 10:44:00
If you spend more than your available balance, your account goes negative, causing an overdraft. Overdraft coverage lets your bank cover transactions over your balance, but you pay a fee. Overdraft protection transfers funds to avoid a negative balance. Overdrafting can lead to fees, declined transactions, account closure, and debt collection.
To avoid overdrafts, consider setting up low balance alerts, maintaining a buffer in your account, and creating a budget. Overdraft fees typically cost around $35 per transaction but can vary. Repaying overdrafts is necessary, as you’re essentially borrowing money from your bank. Opting out of overdraft coverage can help avoid fees.
Read more at Yahoo Finance: What does it mean to overdraft your checking account?