An Overview of Overdraft Protection: Helpful Hints & Tips

couple looking at bank statements

An overdraft is when you spend more money than what is currently in your account. Overdraft protection can be used to cover that shortfall by moving money from another one of your accounts or by covering it as a loan or credit charge that would be repaid with interest.

For personal accounts like checking accounts, overdraft protection is likely an opt-in feature available. This means that unless you chose it, you probably don’t have it. If you’re unsure if you currently have overdraft protection or the option available, call your bank or financial institution to check.

When you make an insufficient funds debit card or ATM transaction without overdraft protection the transaction will be turned down and you won’t be charged any fee. However, if that happens with a scheduled bill payment or a rejected check you could face both an insufficient funds fee and possibly a late-payment charge from whoever was supposed to be paid.

With overdraft protection, money will either be pulled from a linked account to cover the shortfall or it will be attached to a linked credit account. Either way, you’ll still likely be charged a transfer fee and possibly interest costs if credit is used, but at least your payment will be covered.

While overdraft services are an option to protect you in the case of an overdrawn account, you can and should closely monitor your account with online and mobile banking. Fidelity Bank offers enhanced notification options so you can receive text, in-app messages or emails based on your personalized account settings. With some sort of alert set up to keep you aware when your balance is low, you’ll know when you’re close to overdrawing and you’ll be able to either transfer money on your own to prevent a shortfall or you’ll know not to spend that money until you have sufficient funds in your account.

Avoid Overspending: Helpful Tips

Always keep track of your spending.

With online and mobile banking, you can regularly check your account balance and transfer funds as needed. You can also set up mobile and email alerts to let you know when your balance falls below a certain level. When that happens, you’ll know it’s either time to stop spending or to put more money in your account.

Keep a register of your spending.

Track your payments with either a spreadsheet, app, or on paper. That includes checks, debit card use, ATM withdrawals, any automatic payments you have set up, and any fees—such as monthly account charges. Balance your expenses with how much money is in your account. This can also help you identify any opportunities to adjust your spending habits and make saving a priority!

Use direct deposit.

Having your paycheck deposited directly into your account helps ensure that you know exactly when money will be available, rather than having to remember to take the added step of depositing a paper check.

Keep a ‘hidden’ cushion.

Give yourself a built-in cushion of around $100 in your account with no intent of spending it. That way, if you happen slip up, that cushion might save you from an overdraft.

Interested in learning more about Fidelity Banking personal checking accounts? Check out our options available.


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