Why do banks pay overdrafts?
Banks pay overdrafts because people often are willing to pay a fee to have important payments such as those for a mortgage or rent paid even if they don’t have enough money in their account in order to avoid inconvenience, additional fees, and embarrassment. For example, you may want the bank to pay a check or electronic or automatic payment made to a store, mortgage company, or landlord because if it is returned, you might have to pay a fee to the payment recipient and because in the future, your checks or electronic and automatic payments may no longer be accepted. People may also want their ATM and other debit card transactions paid in order to avoid embarrassment or to help them in an emergency or to get through a temporary cash-flow problem.
