Overdraft Protection for Savings Accounts Explained:
With the goal of eliminating not
protection is a provisional form of credit that is applied toward
the savings account in the event of an overdraft -- an instance
where the check is written and cashed
where it is more than the payers available
. Normally there is a stated overdraft limit
up to which the protection will cover and interest is assessed on a daily debit
basis. Also, the interest accrues until the savings institution
is reimbursed by the account holder. Such overdraft
are less than loan rates should they be applied toward an account.
Overdraft plans do have stipulations, however. The credit line
attached to the account is only intended to be accessed infrequently,
all, and is intended to be a last step measure. As such, many banks
view the plans as a privilege they extend to customers. It is
not a practice that account owners should repeatedly come to rely on.