- A fee charged to a credit card holder for exceeding the allowable credit limit on the card. This fee can also be applied to chequing and savings accounts whenever overdraft protection is used.
Related Terms and Acronyms
- Closed-account Fee — Definition,
- A fee charged for shutting down an account. Sometimes charged if the account is closed before a certain time period has passed.
- Credit Line — Definition,
- The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.
- Number of Free Transactions per Month — Definition,
- The number of transactions an account holder is allowed to make before being charged a fee. If the limit is exceeded, a per-item charge is applied. Some accounts offer an unlimited number of free transactions or no free transactions per month.
- Overdraft Annual Cost — Definition,
- A fee charged by the bank to cover the overdraft feature on a client's chequing account. The client pays the fee even if the overdraft protection is never activated. This fee may be charged in addition to the one-time fee.
- Overdraft Protection — Definition,
- A service that allows a chequing account to be linked to another savings or line of credit to provide protection against insufficient funds or overdrafts.
- Penalty Rate — Definition,
- Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.