What is a overdraft?

Question

Im a student at university and wondering what an overdraft is? Also, is there a student banking service that is better to go with?
xxx

Answer 1

When you write a check and you don't have enough money in the bank to pay the check, the bank has two options. They can return the check to the store where you wrote it. Then you will have two charges because the store will charge you a fee for writing them a bad check and the Bank will charge you a fee because they had to go to the trouble of returning the check because it did not have enough funds to cover it. The other option that the Bank has is to "pay" the check for you and charge you a fee for the service. In this case, the bank basically trusts you to bring in enough money to cover the check so they did not return it to the store. But the bank is still entitled to a fee for this service. An overdraft is a service that the bank provides so that the store never has to know that the check was bad. Anytime you write a check from an account that does not have enough money in the bank to cover it, you will be charged a fee by someone. There is a service called overdraft protection which will protect you from having your checks returned to the individual stores but there will be a fee from the bank for every check that "bounces".

Answer 2

IT's when you dont have the money in the bank to cover a check you wrote out. All banks are like that, but what you can do is open a savings account with overdraft protection.

Answer 3

An "overdraft" is an amount of money that the bank is willing to loan you without notice because you are paying for the service.

If you have $55.43 in your chequing account, and write a cheque for $55.45, and do NOT have Overdraft Protection, the bank will ding you $20 for an NSF cheque and bounce it.

With Overdraft Protection, they will allow the cheque to post, and your account to go into the red (you owing the bank money), and charge interest on the "loan."

Hope that helps, but since I don't know what college, let alone City you're in...

Answer 4

Be very strict when you spend your overdraft I spent right up the the limit on mine last year and I spent the entire summer holiday working for practically no money because every time I got paid the bank would just take it all off me.

Answer 5

An overdraft is techically a a rolling loan from the bank. It allows you to spend more money than you have and it is automatically repaid when you deposit money into the account.

Answer 6

When I was a student, the only difference between a student checking account and a normal one was that the student account was free. Since free checking is now pretty standard, I have no idea why the concept is still around.

Answer 7

writing a check when you don't have funds in your account to cover it

Answer 8

it is when you spent to much money and there is no more to cover that check.