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Overdraft Protection

An overdraft occurs when you do not have enough money in your account to cover a transaction. You can set up an Overdraft Transfer, which allows you to link other savings accounts to provide those additional necessary funds to be pulled from. If Overdraft Transfers aren’t set up, or you don’t have the necessary funds, Overdraft Protection may kick in. This is an optional service from your financial institution that pays your transactions when you do not have enough available money in your account. Check out the Pros and Cons of Overdraft Protection below:

Pros:

  • Whether or not you have sufficient funds in your checking account for an everyday one-time debit card or ATM transaction, overdraft coverage may allow the transaction to process.  
  • Overdraft protection provides peace of mind. You don’t have to worry about your transactions being declined or a check being returned.
  • If your payment is declined, you may end up with a bounced check or insufficient funds transaction, which could result in other fees or penalties. Overdraft protection may come at a cost but at least you know what you’re additional cost is.
  •  Some bills have an impact on your credit score, such as credit card bills and student loan payments. Overdraft protection helps prevent a late payment from showing up on your credit report. It also helps you avoid late fees for these bills.

Cons:

  • There may be a fee to use Overdraft Protection. Be sure to check into the cost of this service before opting-in.
  • If your checking account processes more than one overdraft protection transfer a day, your bank might charge a fee for each individual transfer.
  • Overdraft protection offers peace of mind, but don’t let it prevent you from budgeting. It’s important to regularly review your banking activity to spot fraudulent activity and check in on your spending.

Overdraft Protection is typically a service you have to opt-in to and agree to have on your account. It can act as a safety net, but whether it's right for you or not is up to you. Learn more about PFCU’s Courtesy Pay Overdraft Protection service here.