Overdraft Protection: What Does It Mean?

Overdraft protection prevents your account from going negative by automatically covering transactions when you don't have sufficient funds. Your bank might transfer money from a linked savings account, extend a small loan, or use a linked credit card to cover the difference.

While overdraft protection prevents the embarrassment of declined transactions, it typically comes with fees ($10-35 per transfer). Some protection methods are better than others—transfers from your own savings account usually cost less than fees, overdraft loans or credit card advances. The best protection is simply monitoring your balance, but having a backup plan can provide peace of mind.