What is overdraft line of credit?
Overdraft line of credit is a short-term loan that allows you to avoid an insufficient funds charge when you write a check for an amount greater than you have in your account. It allows you to write checks from your checking account before a deposit has been cleared into your account, if you need to. Just apply for overdraft protection when you apply for your checking account. If approved, we will establish a credit limit for your overdraft line of credit account, and then whenever you write a check or use your debit/check card for more than you currently have available in your account, your overdraft line of credit will kick in and those funds will be available to you.
An overdraft line of credit is a loan attached to your checking account. . When you spend all of the money in your checking account, you start borrowing against your overdraft line of credit. It is meant to cover you in case of an accidental overdraft. It’s easy to abuse an overdraft line of credit; you should not use your overdraft line of credit regularly. Constantly using it is a sign that you need to work on managing your money. You can write a check against your account when you know it’s empty, but that’s a bad habit to get into. If you misuse your overdraft line of credit, your bank can refuse to cover transactions or close it. It usually has a credit limit too; anywhere from $100 to $1000. Having a “$0” overdraft line of credit means you don’t have that particular feature on your checking account — which is a good thing. You’ll be less likely to use it as a crutch, and more likely to keep close track of your account balance.
