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