Overdraft Protection for Savings Accounts Explained:

With the goal of eliminating not sufficient funds fees, overdraft 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 account balance. 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 plan fee services 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, if at 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.