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How much can you overdraft your checking account?

An overdraft occurs when you don’t have enough money in your checking account to cover your withdrawal transactions.
How much money you can overdraft depends on the overdraft policy set by your credit union, bank, or other financial institution. All financial institutions have an overdraft limit which is the amount of money they will allow an account holder to overdraw.
When you open a checking account, you may want to ask a representative, “What's the most I can overdraft my account?” and “How much overdraft can I get? Each financial institution sets different limits which can range from $100 to $1000.
At Credit Union of Southern California (CU SoCal), we make getting a Home Equity Line of Credit (HELOC) easier.
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

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What are checking accounts and how do they work?

A checking account can be provided by a credit union, bank or online bank. Checking accounts are used for making frequent deposits of income and withdrawals to pay expenses.
There are many ways to access the money in your checking account. All checking accounts come with checks and a debit card, plus online and mobile access. At CU SoCal, our Classic Checking and Rewards Checking accounts provide access to 30,000 free CO-OP Network ATMs across the United States.
What does it mean to overdraft a checking account?
To overdraft a checking account means you have made a withdrawal transaction for more money than you have in your account. For example, you write a check for $500 but only have $400 in your checking account.
To help protect consumers, credit unions and banks offer overdraft protection, which means they’ll pay the extra amount for you and charge a fee for doing so.
Here’s how overdraft limits work:
For example, if you have $2,000 in your checking account and make a withdrawal of $2,200, there will be an overdraft of $200. Overdraft protection means the financial institution will authorize and pay overdrafts up to a specific overdraft limit. If your transaction exceeds the limit the transaction will be denied.

Types of overdrafts

These are the two most common types of overdrafts that can occur:
Authorized overdrafts. Credit unions and banks may let their customers pre-arrange an overdraft limit for which the customer will be covered. These authorized overdrafts allow the transaction to be completed, although there may be a fee charged for this benefit.
Unauthorized overdrafts. These are overdrafts that occur without an overdraft limit authorized by your financial institution or when you exceed an authorized overdraft limit.

What are overdraft fees?

Overdraft fees are charged by credit unions and banks when an account holder overdraws their account and/or overdraws an amount greater than the financial institution’s overdraft limit.
Some financial institutions offer a service called Courtesy Pay whereby the credit union or bank covers overdrafts. However, there are fees charged each time the overdraft is paid. For example, CU SoCal will authorize and pay overdrafts for the following transactions:
  • Checks and other transactions made using your checking account number.
  • Automatic bill payments.
Overdrafts aren’t talked about often, until it happens to you. If you’ve had an overdraft you’re probably wondering, “How much can I overdraft my checking account?”.
All financial institutions charge overdraft fees. The amount you can overdraft your checking account will depend on the limits and policies of your financial institution.
How to avoid over drafting your checking account

To avoid over-drafting your checking account, consider following these tips:
  1. Watch your balances regularly. Keeping track of your checking account balance is the primary way to avoid overdrafting your account. Be sure to move money into your checking account so you have ample funds to cover paying bills or other significant withdrawals from your checking account.
  2. Set up alerts for low balances. All financial institutions provide their account holders with ways to opt-in to receive a “low account balance” notification by text or email. Signing up for these notifications means you’ll be alerted when your checking account balance is near or below the required minimum, thus giving you time to move money into your account.
  3. Transfer money quickly when an overdraft occurs. As soon as you are alerted to an overdraft on your account, transferring money into your account as soon as possible could help prevent a check bouncing a second time. For example, if you’ve paid someone by check but don’t have sufficient funds in your account to cover the full amount the check will bounce. However, if the recipient’s bank resubmits the check, you may be charged overdraft fees and insufficient funds fees each time there is an attempt to redeposit the check.
  4. Link your checking account to a savings account. Linking your accounts can prevent overdrafts, as your bank will deduct the funds from your savings account that are needed to complete your withdrawal transaction.
  5. Use a prepaid debit card. Traditional debit cards are linked to a checking account. A pre-paid debit card is not linked to an account and may be purchased from a retail store or bank. Once you purchase your card, you’ll load a specific dollar amount on the card so you can use it for purchases or payments.
What is overdraft protection and how does it work?
Overdraft protection is a service offered by credit unions and banks to help you avoid overdrafts on your account. There are several types of overdraft protection options that credit unions and bank offer, so if an overdraft should occur, the money needed to complete the transaction is covered.
Types of overdraft protection
These are the most popular types of overdraft protection available at credit unions and banks:
Opt-in overdraft protection. When you opt-in for overdraft protection, your financial institution will pay for your transactions to go through, essentially covering you for the amount that is over the amount you have in your account. There is typically an overdraft protection fee for this service.

Linked bank accounts. This option lets you link a savings account or other account to your checking account, so your transactions are completed using money from the linked account.
Credit cards. Some financial institutions let you link a credit card to your checking account to cover the balance of the overdraft. There may be an overdraft protection fee for this service, which will be charged to your credit card.

Line of credit. Some financial institutions offer a line of credit that will be drawn from in the event you are making a withdrawal transaction that cannot be covered by the balance in your checking account. The bank will transfer money from your line of credit into your checking account. Interest will be charged on the overdrawn amount until you pay it off.

Is overdraft protection worth it?
If you tend to keep a low balance in your checking account and often write checks for larger amounts than you have in your account, then obtaining overdraft protection is worth it. Overdraft protection will save you money on overdraft fees and eliminate the worry associated with overdrawing an account.

Why Savvy Consumers Choose CU SoCal

For over 60 years, CU SoCal has been providing financial services, including HELOCs, car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.

Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with one of our account experts.

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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