Quick Definition

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero, resulting in a negative balance.

Examples

• 1A person writes a check for $150 but only has $100 in their account, resulting in a $50 overdraft.
• 2Using a debit card for a $200 purchase when the account balance is $180, causing a $20 overdraft.
• 3Accidentally setting up a $300 automatic bill payment when the account balance is $250, leading to a $50 overdraft.

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