Can you overdraft checking account

The first important thing to understand in this situation is the overdraft arrangement you have with your bank. An overdraft occurs when there is a transaction against your account that takes the balance below zero.

This could be caused by a number of events: a check you wrote, a charge you made with your debit card, an automatic payment that processed, or your attempt to withdraw cash at an ATM. Importantly, banks may treat different transactions differently. ATM and one-time debit card transactions are subject to different rules than checks and ACH transactions.

When a charge is made against your account that would take it to a negative balance, there are three potential outcomes. First, your bank may foot the bill on your behalf and charge you an overdraft fee. Some banks will continue charging you for any additional transactions you make while the account is negative. These fees are often pretty steep and will add up quickly if you have to pay multiple times. Second, funds from another account you own may be used to cover the charge. When the primary account reaches zero, funds from the other account are used transferred to cover the amount.

You will usually pay a small fee for the transfer. Ideally, your linked account would be a savings account or another checking account. You typically want to avoid using a credit card as your backup account , because it will likely be processed as a cash advance. Morgan Advisor. Online Investing with J. Chase for Business. Commercial Banking. See all. About Chase J. Chase Overdraft Services. Make the choice that's right for you. Standard Overdraft Practice.

Learn more about standard overdraft practice. Overdraft Protection. Optional service to link a Chase savings account as backup to your checking account What's covered All transactions, including everyday debit card purchases What it costs No transfer fee, but other fees may apply. Learn more about overdraft protection. Debit Card Coverage. Learn more about debit card coverage. Know your balance. To change or withdraw your consent choices for Investopedia.

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Paying With Checks. Using a Debit Card. Best Checking Accounts. Business Checking Accounts. Banking Checking Accounts. What Are the Consequences of Overdrawing a Checking Account Even if you regularly peek at your bank balances online, it is possible to accidentally let your account fall negative, otherwise known as overdrawing your account.

Key Takeaways If you have overdraft protection, your bank will let your account become negative but will charge you fees for every transaction.

Monitoring your account closely—and linking your checking account to a backup savings account—can help you avoid overdraft fees. Article Sources. Investopedia requires writers to use primary sources to support their work.

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