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What Is Overdraft Protection and Do You Need It?

Protect yourself from onerous overdraft fees.

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Overdraft protection can save you from getting dinged with overdraft fees if you spend more than what you have in your checking account. This optional account feature can provide an extra layer of protection from overdrawing your account, by linking a savings account or line of credit that can serve as a backstop if you overdraw. Read on to learn everything you should know about overdraft protection.

What is overdraft protection? 

If you overdraw your checking account, many banks will hit you with a high fee (though a growing number have discontinued this arguably predatory practice). Overdraft protection, an optional feature, can help protect you from these fees. If you have this activated for your checking account, your bank will cover the transaction by moving funds from a linked savings account or line of credit to the overdrawn account. And if you link a credit card, the bank will initiate a cash advance to prevent the account from becoming overdrawn. 

Overdraft protection is typically an opt-in service, so you’ll need to turn it on before your bank will cover a transaction on an overdrawn account. If you don’t turn on overdraft protection, your bank may simply decline the charge if your account lacks sufficient funds. In this case, you may end up with a bounced check or unsuccessful debit transaction, which may result in other fees or penalties, or perhaps a late fee from the merchant or service provider on the other side of the incomplete transaction.

How much does overdraft protection cost?

Once you opt in to overdraft protection, you may still be charged a fee if you need to use it, usually between $10 to $12.50 per transaction. It’s not nothing -- but it’s less than a standard overdraft fee, which is usually around $35.

Pros and cons of overdraft protection


  • The bank will still approve the transaction even if your account doesn’t have enough money to cover an expense. 

  • If you’re charged a fee for it, it will likely be lower than an overdraft fee. 

  • You can avoid returned check fees from merchants because checks will still clear. 

  • You will retain access to funds in an emergency.


  • Some banks will charge a fee per overdraft protection transfer.

  • The transaction may be declined if you don’t have enough money in your linked savings account.

  • You may be tempted to overspend.

Should you opt in to overdraft protection?

Overdraft protection can give you an extra layer of financial security, save you the embarrassment of having your card declined and provide reliable funding in an emergency. And the fees are usually lower than overdraft fees. 

The bottom line

Overdraft protection can be a valuable tool. If you’re attentive to your account balance, you shouldn’t need it. But if you want an extra layer of security, overdraft protection is a useful feature.

This article was assisted by an AI engine and reviewed, fact-checked and edited by our editorial staff.