Overdraft Protection

Definition

  • A bank service that links a chequing account to either a savings account or line of credit to provide protection against non-sufficient funds (NSF) charges, bounced cheques and declined transactions.

Synonyms
safety net, instant credit, automatic protection, no-bounce policy

Related Terms and Acronyms

  • Call Deposit Account Definition,
    • A bank account that combines some features from both savings and checking accounts.
  • Cheque Clearing Definition,
    • When you write a cheque to a person or a company, the cheque is typically cashed when deposited into a bank account. Your chequing account is then debited for the amount of the cheque and the cheque is said to have "cleared."
  • Float Definition,
    • The amount of time the bank takes to clear or reject a cheque for payment
    • The time at which funds are debited from the issuer's account.
  • Insufficient Funds (ISF) Acronym,
    • When funds are not enough to satisfy the payment of a cheque or draft made on that account; also known as non-sufficient funds (NSF).
  • NSF Definition,
    • NSF means Non-sufficient Funds.
  • 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.
  • Over-the-limit Fee Definition,
    • A fee charged for exceeding the credit limit on the card.
  • Overdraft (DR) Acronym,
    • The amount that a cheque exceeds the available balance in the payor's account; also insufficient funds.
    Bank account transaction code.
  • 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 Minimum Amount Definition,
    • Minimum amount that will be transferred to the accountholder's account if a potential non-sufficient funds (NSF) situation occurs.
  • Service Charge (SC) Acronym,
    • Fees charged to customers for specific services or as a penalty for not meeting certain requirements such as insufficient funds in a chequing account.
    Bank account transaction code.
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