What Are Some Things You Can Use Overdraft For

What is the point of overdraft fees?

In my area, when the bank gives you any sort of credit facility (including an overdraft) they are required to put up some funds with the central bank to guarantee your overdraft should you default. The amount is not the equivalent of the overdraft but some portion that is stipulated for each of the different facilities. The bank may also insure (or re-insure) your overdraft. The guarantee and the insurance cost money, especially if you have an overdraft that you don't use. That's why the banks charge a fee

How does an overdraft work?

To understand that, lets first understand what an overdraft is. There are two types of overdraft: Authorized overdrafts(arranged in advance) and Unauthorized overdrafts(unplanned overdrafts). An overdraft will allow you to borrow money from the bank when your balance goes below zero. It allows you to make payments or purchases even when your out of money.How does an overdraft workTo receive overdraft protection, you need to opt-in to the bank’s overdraft protection program. You can opt-out of the program, but after you do that you will not be able to make purchases after your account balance is zero. But doing that would does save you from 35$ overdraft fees.An overdraft is like a debt, as you’re using money that is being loaned to you from your bank. But overdrafts should only be an emergency fund or short-term credit option because of how expensive it is. Some banks limit it to a maximum four times per day and some have an unlimited overdraft policy.

What are overdraft fees? How do they work?

Jim’s answer is great. I recently launched a blog talking about overdraft -highly recommend to check it out. You will find the exact overdraft fee definition and the full list of overdraft fees by bank.

How many times can I overdraft my account?

That is up to your financial institution. As having been an officer in charge of overdrafts at a credit union, I can tell you that there is a limit as to how often you can do this before the financial institution decides that you lose the right to have the account.An overdraft should be a temporary lapse, not a standard status of an account. If you feel that you are unable to have your account not overdrawn every month, this means you’re living beyond your means. I urge you to sit down and take a look at your budget. If you don’t know how to create your own budget, here’s what you need to do:This month, take every single receipt for every single purchase you’ve made and stuff it in an envelope you keep handy. If you didn’t get a receipt for something, write it on small piece of paper and stuff it in there. If you’ve thrown out receipts because it’s already the 9th of the month, take a look at your account and write everything you see on there on a piece of paper and -yes, you guessed it- put it in the envelope. Also put in there every single bill you’ve paid.Then at the beginning of next month follow the steps on this blog article. I wrote it a few years ago to help our members and people use it all the time.I wish you luck and hope you figure out how to remedy your current situation. Let me know if I may be of any assistance.

How would I get my overdraft fees refunded at a bank?

I answered elsewhere but here goes it again…The bank has already determined your value to them based on what you have on deposit and what other services you use that generate revenue for them.When you call or even go into the bank there is likely a protocol they will follow. If you call you will be routed to reps that either have no authority to give you refund…. only lip service or you are transferred to someone that will listen to your complaint and is empowered to refund you.three things can occur:You are highly valued and the complaint generates refund.You fall somewhere in the middle. If you complain enough to be annoying then they may give you some baloney about one-time refund requestThey think you are deadbeat and only value your account so they can stick you for various fees. They take advantage over your mistakes as opportunity to charge more fees. Too bad too sad if you have not read all the fine print in disclosures that nobody readsYou determine where you are and report your success. I doubt you are in higher echelon else-wise you would not bother to ask.Feeling or stating that the fee is not fair in some way will never work. Likely it is your fault.

What is the difference between a loan and an overdraft?

First, lets talk about Loans -What is a Loan?A loan is a capital that you ask from bank and in turn sign the bond to repay it within the stipulated time as agreed upon both by bank and you.A loan can be mainly two types - secured loans and unsecured loans.Loans such as a personal loan, wedding loan, travel loan and gold loan come under unsecured loans. However, a home loan, car loan, business loan, education loan, loan against property, etc. are secured loans where the borrower has to submit a collateral.Each loan is a multi-purpose loan and has different factors based on which lenders approve it.The loan amount has to paid in Equated Monthly Installments (EMIs) every month failing to which leads to decrease in credit score or legal action from the lenders side.The interest rate applicable to these loans is fixed and floating both. An applicant can choose which type of interest rate she wants.The loan amount and rate are approved by the lender and can vary depending on the income, credit history and other factors that define repayment capacity of the borrower.There is a fixed tenure for a loan and the borrower has to repay the loan within that time frame.You can close the loan account before the estimated time.Now let’s talk about the OverdraftOverdraft is a facility which you can avail when you have a savings account in any bank. The bank, on the basis of your spending habits, will allow you to draw extra money from your savings account. The magnitude of overdraft is decided by the bank and it is advisable to never utilize your full overdraft limit.Below are some key Overdraft pointers -An overdraft facility can be taken against a salary account, Fixed Deposit account, assets such as property, gold, investments, and loans.This is a facility where the borrower gets extra funds on the basis of the amount maintained in the account.The interest rate applicable to these vary based on which loan account you want to use for overdraft.The maximum loan amount you can get on an overdraft is decided on the basis of the balance maintained in the account.For overdraft against fixed deposits, interest rates are generally 1% higher than the annual rate offered by the bank.For loans such as home loans and personal loans, you will be charged existing interest rate.There is no fixed tenure for an overdraft even though loan amount and interest rates are fixed.The interest you pay is only applied to the overdraft amount and not the total overdraft limit.

What are some strategies to avoid overdraft fees?

First off, overdraft protection is actually coverage you can choose to opt out of. When you open your account with a bank or credit union, this is in the fine print that you are acknowledging it. Banks have recently come under fire for illegal overdraft practices so you have to protect yourself against shady practices. You can stop by a branch anytime and ask to opt out. If you choose to keep here, here are some strategies to prevent them:If you have a smart phone and your institution has an app, it should be one of the first things on your phone. It is crucial to keep up with knowing what your current balances are so you don't overdraw in the first place. Apps are enormously convenient because you can check 24/7 and see if that $4 latte will put you over.On that note, most institutions have email and text alerts you can activate to alert you when you hit a certain balance.Start saving for that $1,000 emergency fund. Read this post for tips on how to start budgeting successfully and begin digging out of the hole of living paycheck to paycheck. If shopping is your habit, read here too for ways to curb that urge.Visit your branch and ask to opt out of overdraft protection. This way, instead of being charged that fee, your debit card swipe will be declined.Already hit with the fee? Call your institution. Don't just be defeated, you may be surprised how quickly they reverse this fee if you aren't a repeat offender. Everyone makes mistakes, fortunately, it can be reversed.If your savings and checking are at the same institution, you can link the accounts so if you overdraw your checking but you have funds to cover the purchase in your savings account it will transfer over. Oftentimes, there is still a small fee for this but it is less than an overdraft so you are still saving money.You can read more here: https://www.thegreenpurpose.com/...