What Are Overdraft Protection Loans?

Overdraft protection loans are used by many people every day. These programs are offered through a bank when you have a checking account with them. Here are the basics of an overdraft protection loan and how it works.

Overdraft Protection Loans

An overdraft protection loan is designed to cover any transactions that go beyond the amount of funds in your bank account. For example, if you have only $200 in your bank account and you write a check for $250, the overdraft protection loan would allow the check to go through. Many customers appreciate having this protection in place because of the convenience that it provides.

Limits

Typically, you will have a limit that you will have to stay within for this type of loan. In many cases, you will have overdraft protection for somewhere between $400 and $500. 

Fees

In order to be provided with this program, you will have to pay a fee for each time that you use it. Many times, the fee can be as much as $30 to $40 per transaction. However, the average fee for this type of loan is $17 per transaction. Therefore, if you have multiple transactions that take you below your balance, it will cost $17 for each of them.


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