overdrafts
An overdraft occurs when a bank account holder withdraws more money than is available in their account. This can happen through checks, debit card transactions, or automatic payments. When this happens, the bank may allow the transaction to go through, but the account will show a negative balance, meaning the account holder owes money to the bank.
Banks often charge fees for overdrafts, which can add up quickly. Some banks offer overdraft protection, a service that links a savings account or credit line to the checking account to cover transactions that exceed the available balance, helping to avoid fees and negative balances.