overdraft
noun
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Definition of overdraft
Examples of overdraft in a Sentence
Recent Examples on the Web
As a result, some account balances became negative and potentially subject to various fees — including overdraft charges. — Patrick Danner, ExpressNews.com, "USAA Bank faces class-action lawsuit over overdraft fees," 26 Aug. 2019 The delay costs billions in late fees and overdraft charges for millions of people living paycheck-to-paycheck, industry experts and regulators say. — Renae Merle, Washington Post, "Fed says it will develop faster digital banking system. But Wall Street fears tech incursion.," 5 Aug. 2019 According to a 2017 Overdraft Study by research firm Moebs Services, an economic research firm, the median cost of an overdraft is $30. — Adam Shell, USA TODAY, "Chase all-mobile bank, Finn, rolled out nationwide in search of Millennials," 28 June 2018 Each time, the bank charged Mr. Einaudi a $35 overdraft fee. — Emily Flitter, New York Times, "Wells Fargo Closed Their Accounts, but the Fees Continued to Mount," 16 Aug. 2019 The fund also incurred $4,555 in overdraft fees due to Cronin’s thefts, according to the warrant. — David Owens, courant.com, "Republican lawyer pleads not guilty to stealing campaign funds," 12 Aug. 2019 Meanwhile, the banks will still be pulling in overdraft fees. — The Economist, "The Fed says it will build a real-time interbank payments system," 10 Aug. 2019 Women pay 18% more than men in banking fees, including ATM charges and overdraft fees, new research from the app Stash found. — Fortune, "Megan Rapinoe on What Women’s Soccer Needs: The Broadsheet," 30 July 2019 Betterment also plans to introduce its Betterment Everyday Checking, which feature no account fees, overdraft fees, minimum balances or monthly maintenance fees. — Janna Herron, USA TODAY, "Betterment jumps into savings war with 2.69% APY. Checking is next.," 23 July 2019These example sentences are selected automatically from various online news sources to reflect current usage of the word 'overdraft.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for overdraft
overdraft
nounFinancial Definition of overdraft
How It Works
Let’s assume John Doe has $1,000 in his checking account today. He goes to the mall and writes a check for $1,250 at a furniture store. Because there are insufficient funds to cover the amount of the check, John is going to overdraft his account.
When the furniture retailer attempts to deposit the check, the furniture retailer’s bank (Bank ABC) will present the check to John Doe’s bank for payment. John Doe’s bank will then either pay the check (which might occur if John Doe has overdraft protection at his bank) or "bounce" the check by returning it to Bank ABC without payment. Often, banks stamp the check itself with a large "NSF" stamp (which stands for “nonsufficient funds”). Typically, Bank ABC will charge the furniture retailer a fee for presenting a bad check, and John Doe’s bank will charge John for the overdraft. The furniture store will also likely charge John Doe a fee for the overdraft.
Why It Matters
In most states, writing a bad check is at least a misdemeanor, with the consequences growing depending on the state, the amount involved and whether the transaction crosses state lines. Most overdrafts are simply oversights by consumers, so even if the police are not involved, the fees for bouncing checks can run in the hundreds or even thousands of dollars if the check writer is particularly disorganized. For this reason, it’s important to have an overdraft line or a second account from which a bank may draw when the funds in the check writer’s primary account are insufficient.
Source: Investing Answers
overdraft
noun
English Language Learners Definition of overdraft
See the full definition for overdraft in the English Language Learners Dictionary
overdraft
noun
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Legal Definition of overdraft
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