Overdraft Protection

Overdraft protection is a feature of many checking accounts that attaches an instant credit line to a checking account that remains dormant until the balance of the account reaches zero. This prevents checks from bouncing by issuing the writer of the check an immediate loan should the check be cashed while there are insufficient funds in the checking account.

In most cases, the interest rate on these instant mini-loans is pretty high so it is best to make a deposint to the empty checking account as soon as possible to avoid the interest rates. In most cases, overdraft protection saves people money by preventing returned check fees from being charged to the check writer.

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