If you wondered, overdrafting can simply be described as wanting to take more money out of your bank account than you have in it. Think of it as a small short term loan. ATMs that let you overdraft will allow you to withdraw cash even though you don’t have enough balance on your account. Most banks and credit card companies will let you to do so but there are usually (high) fees for this service.

In order to allow your account to overdraft, you will have to opt-in for an “overdraft protection” service. This means that you will authorize your bank or credit card company to overdraft your checking account. Most people have this service enabled, although survey shows that many don’t remember they were ever asked to opt-in. This is especially “interesting” when we know how expensive overdrafting is.

I want to overdraft my account

How is it possible to withdraw more money than your current balance from an ATM? If you have an overdraft agreement with your credit card company or bank, it will allow you to do this for a fee (usually $35).

However, you can sign up for different services that might reduce these costs. Some banks have provisions where money will automatically be transferred from one account to another such as checking accounts or savings accounts. Once you overdraw your balance from one account (the one you used your debit card with), it will automatically take funds from your other account to cover the excess.

Another solution you might consider if you want save money is to use apps such as the PockBox.com app. PockBox will let you borrow money (up to $2500) very quickly. The application process takes about 5 minutes and is very straightforward. This is ideal if you actually need a larger buffer than a few bucks and could make you save hundreds of dollars on overdraft fees.

FIND OUT ABOUT>> Can you overdraft a savings account and save money in overdraft fees?

Top-up your checking account instead of overdrafting


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PockBox is the perfect app to top up your checking account (with up to $2,500) and use the money to buy stuff online. The process is sleek and straightforward. You will just have to give some information about yourself.
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SpotMe by Chime can provide you up to $100* or more of overdrafts before your next paycheck. The cost? It is interest-free!

Chime is essentially a new type of banking service app. Once you sign up, you get a free checking account with lots of goodies. There are no overdraft fees at all (in a matter of fact, you actually don’t have any fees whatsoever!) This service is called SpotMe and allows eligible members to overdraw up to $100* on debit card purchases without charging a fee. If you try to spend more than you are allowed after this, your transaction will simply be declined.

Eligibility criteria - you must be a U.S. resident and aged 18+. All Chime members with total monthly direct deposits of $500 or more are eligible for SpotMe.

They also offer interest-free cash advances on your paychecks up to 2 days early with direct deposit**.

Click here to check it out.

Overdraft amount limits

There really are no set limits on how much you van overdraft. These vary from financial institution to financial institution and many times are even tailored to each individual account holder. Other factors are whether you are using your banks ATM or those owned by another financial institution. Sometimes, only your banks’ ATMs will let you overdraft.

As a general rule, new account holders and those with poor credit scores are often very limited in the amount they are allowed to overdraft their accounts for (usually around $100-$300). More established individuals with higher credit scores are often allowed to overdraft amounts sometimes in excess of $1,000. Even if you ask your bank what their particular policy is, they won’t be able to quote you overdraft figures until you sit down with them and fill out the paperwork.

When you are at another bank’s ATM the rules for overdrawing will most likely be different and won’t be as high as your bank will allow it. Some financial institutions do not even permit non-bank member overdrafts while other limit overdrafts to smaller amounts.

FIND OUT MORE>> How much can I overdraft my checking account

Overdraft fees

This is one thing you really have to be aware of and look out for. This is especially true if you are only looking to overdraft a small amount of money. The fees can be excessive if you are not careful and should be highly considered before you take any overdraft. Make sure you are aware what your banks fees are for overdrafting the type of account you have with them. Many times overdrafts fees can be $30 or higher so it may not be worth it to overdraft your account for a $10 purchase.

Overdrafts are well-known to be very costly in most instances. A 2013 CFBP report on overdraft fees determined that the average fee for an overdraft in 2012 amounted to $31.26. That was a $10 increase over a 14 year period that the company was keeping track of overdraft fees. In 2017, the average fee increased to $35. This is one of the main reasons to avoid overdrafting altogether.

FIND OUT>> How much does your bank charge for an overdraft? Check out our list of overdraft fees by bank

Overdrafting with a debit card

Overdrafting with a debit card is basically setup the same way as overdrafting with an ATM card. Your limits are determined by your bank and the fees they charge are usually a set amount. When you overdraft with your debit card your bank will also expect you to return your account to a positive balance as soon as possible. Failure to do this could result in penalties or additional fees.

RELATED ISSUE>> If you are purposely looking to overdraft your debit or ATM card, you should check out cheaper solutions such as personal loan apps

Overdrafting with a credit card

There are few things as costly in the financial world as withdrawing cash on a credit card. That’s why we advise against and most people who are prudent don’t do it except in the case of emergency. Cash withdrawal rates on credit cards are typically 5%-10% higher than the regular rate on that credit card for purchases. There really are no fees for overdrafting a credit card except these outrageous interest rates.

Withdraw from ATM with negative balance

If you asked yourself how to get money from ATM without funds, well, this is as simple as usual. If you are enrolled in an overdraft protection program, your debit card will allow to withdraw cash even if your balance is already negative. Of course, you will be charged an overdraft fee every time you do so.

READ MORE>> Can you overdraft a negative account

Does an overdraft affect your credit score?

Typically speaking, a debit card overdraft does not adversely impact your credit score. It actually helps maintain it from having a black mark for having an insufficient fund item. This is one of the few positives about overdraft protection. The only time it will come back to haunt you as far as your credit is concerned is if you take too long to repay the overdraft amount.
Once again, credit card overdrafting is treated differently and may definitely impact your credit score negatively if you overdraft your account with them.

Things to consider when you overdraft

  • Use alternative services such as the RainyDay app. They will let you borrow up to $2500 in minutes and save hundreds of dollars on overdraft fees.
  • Whenever possible use your own banks ATM so you won’t be refused an overdraft.
  • Try to pay your debit card overdraft back in 30 days or less so it does not impact your credit score.
  • Be aware of the absorbent amount of interest credit cards charge for overdrafts. There is no set overdraft fee but it’s hidden in these interest rates.

Tips on how to avoid an overdraft

  • Make sure you are super familiar with how your bank accounts and credit cards work as far as overdrafts are concerned.
  • Track your spending with both store and ATM receipts.
  • Sometimes using a low interest credit card is cheaper than the fees associated with an overdraft so consider it if it’s an option. Pay it off before interest accrues on it to save money.
  • Link your checking and savings accounts so you can automatically transfer funds between them in the event of an overdraft situation.
  • Ask your bank to set you up for low account balance texts.
  • Try having some cash on hand for unexpected purchases and emergencies.
Disclaimer: * Chime SpotMe is an optional, no fee service that requires $500 in qualifying direct deposits to the Chime Spending Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases initially, but may be later eligible for a higher limit of up to $100 or more based on member's Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime's discretion. SpotMe won't cover non-debit card purchases, including ATM withdrawals, ACH transfers, Pay Friends transfers, or Chime Checkbook transactions. Click here to check out SpotMe terms.
** Early access to direct deposit funds depends on timing of payer’s submission of deposits. We generally post such deposits on the day they are received which may be up to 2 days earlier than the payer’s scheduled payment date.