We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
How Overdraft Protection Transfers Work
Overdraft protection transfers allow your transactions to go through even if you overdraw your checking account.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Margarette Burnette is a NerdWallet authority on savings, who has been writing about bank accounts since before the Great Recession. Her work has been featured in The Associated Press, USA Today and other major newspapers. Before joining NerdWallet, Margarette was a freelance journalist with bylines in magazines such as Good Housekeeping, Black Enterprise and Parenting. She is based near Atlanta, Georgia.
Sara Clarke is a former Banking editor at NerdWallet. She has been an editor and project manager in newsrooms for two decades, most recently at U.S. News & World Report. She managed projects such as the U.S. News education rankings and the Best States rankings. Sara has appeared on SiriusXM Business Radio and iHeartMedia’s WHO Newsradio and has been quoted in The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. She is based near Washington, D.C.
An overdraft protection transfer is an opt-in service that lets you link your checking account to another account at your bank or credit union, typically a savings account or an overdraft line of credit. It is among the overdraft protection options typically offered by banks.
When your checking balance is too low to cover a transaction, your bank automatically moves money to checking from the linked account or line of credit. Some banks do this for free, while others might charge $12 or more per transfer.
Even if there’s a cost, it is usually lower than the bank’s standard overdraft fee.
How is overdraft protection different from overdraft coverage?
Overdraft coverage is when banks use their money to cover a transaction that would overdraw your account — and charge you a fee to do so. You have to opt in to this service, and it’s expensive: Fees can sometimes reach $35 or more.
And there can still be more costs. If you don’t bring your account up to a positive balance, the next item you buy can trigger another overdraft fee. Also, even if you don’t make more transactions, you may be subject to a continuous negative balance fee.
What types of accounts can be linked for overdraft protection?
You can connect a savings, money market or second checking account to your main checking account to cover any overdrafts with your own money. Fees generally range from zero to $12 per transfer, although some banks charge more for this service. Your bank may also offer an overdraft line of credit, which tends to come with a high interest rate.
In addition, financial institutions often charge a savings withdrawal limit fee if you exceed six transfers per month from a savings or money market account — though those limits were lifted during the COVID-19 pandemic and continue to be waived by some financial institutions — and an overdraft protection transfer would count against that limit. If you tend to transfer money out often, be careful.
AD
A savings account is a place where you can store money securely while earning interest.
A savings account is a place where you can store money securely while earning interest.
4.30%SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
5.00%Annual Percentage Yield (APY) is accurate as of 10/01/2024. APY may change at any time before or after the account is opened. Available only online.
4.50%4.50% APY for $0 to <$250k; 4.80% APY for $250k+ balance
Min. balance for APY
$0
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
5.00%*Current promotional rate; annual percentage yield (variable) is 4.50% as of 9/20/24, plus a .50% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .50% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
Can you use a credit card for overdraft protection?
You can also link a credit account, such as a credit card, personal line of credit or home equity line of credit, as a backup. You’ll pay interest on the transfer amount and possibly a transfer fee each time money is moved.
Your bank may send you a bill and you may accumulate interest if you don't make payments on time and in full, as would happen with any credit account. Credit accounts are subject to approval, so this option isn’t guaranteed for everyone.
Things to consider when using overdraft protection
Although overdraft protection transfer services can be a low-cost alternative to bank-funded overdraft coverage, there are still factors to consider:
Even with protection, you can still overdraw your checking account. The overdraft protection transfer service works only if you have available funds in your backup savings or credit account. If you write a check for $200, but your checking account has $10, and your backup savings account has only $100, you could still face an overdraft. The transaction could be denied, or if you authorized your bank to cover overdrafts — and your bank chooses to do so — you could be charged steep fees.
More than the exact overdraft amount could be transferred. Banks may transfer overdraft funds in multiples of a certain amount, such as $50. If a transaction pushes your account $8 in the red, for example, the bank could transfer $50, not $8, from savings.
Opting into an overdraft protection transfer service can protect you from steep overdraft fees. You just don’t want to make a habit of spending more than you have.
These programs can help resolve the occasional overdraft, but they can’t replace other money habits, like using alerts to keep an eye on your balance. If you struggle with budgeting or keeping enough money in your checking account for everyday transactions, consider opening an account that has eliminated overdraft fees or offers free or low-cost overdraft protection.
Frequently asked questions
Is it good to have overdraft protection?
Opting into an overdraft protection transfer service can help resolve the occasional overdraft and protect you from steep overdraft fees. But you should try to avoid relying on overdraft programs. If you can, build up the habit of keeping enough cash in your checking account for everyday transactions. Using low balance alerts, if your bank offers them, to track your account can also help.
Can you overdraft if you have no money?
If you don’t have enough money for a transaction, your bank may pay for the transaction and charge you an overdraft fee, or it may choose to decline the transaction and prevent you from overdrafting.
If you’ve opted into overdraft protection, funds could be transferred from your linked account to cover the transaction. You can also contact your bank and ask to opt out of overdraft coverage. This means that the bank will decline any transaction that would result in an overdraft.
How does overdraft protection work?
When your checking balance is too low to cover a transaction, your bank automatically moves money to checking from a linked account, if you’ve opted into overdraft protection service.
Is it good to have overdraft protection?
Opting into an overdraft protection transfer service can help resolve the occasional overdraft and protect you from steep overdraft fees. But you should try to avoid relying on overdraft programs. If you can, build up the habit of keeping enough cash in your checking account for everyday transactions. Using low balance alerts, if your bank offers them, to track your account can also help.
Can you overdraft if you have no money?
If you don’t have enough money for a transaction, your bank may pay for the transaction and charge you an overdraft fee, or it may choose to decline the transaction and prevent you from overdrafting.
If you’ve opted into overdraft protection, funds could be transferred from your linked account to cover the transaction. You can also contact your bank and ask to opt out of overdraft coverage. This means that the bank will decline any transaction that would result in an overdraft.
How does overdraft protection work?
When your checking balance is too low to cover a transaction, your bank automatically moves money to checking from a linked account, if you’ve opted into overdraft protection service.