Overdraft protection allows you to spend more than what you have in your checking account. If you intend to pay for a $1000 product and have just $500 in your bank, this protection (provided by your bank) will allow the transaction to go through. However, is this the same when withdrawing cash? Can you withdraw cash with this protection in place?
You can withdraw money from ATM with overdraft protection however, you should note that the protection comes at a fee, and you won’t be allowed to overdraw your account more than the limit (for authorized overdraft).
You can spend money with an overdraft protection in place. But can with withdraw money from an ATM with this same protection? You are about to find out!
Can You Withdraw Money From ATM With Overdraft Protection?
Before we proceed, let’s look at what an overdraft is. After, I’ll summarize how it works and how to apply for one. Then I’ll conclude this post with the big answer.
An overdraft happens when you don’t have adequate money in your account to cover a transaction, but the bank allows it anyway. Many financial institutions provide overdraft protection programs in which they pay the transaction and charge you a fee. Overdrafts can also be covered via a transfer of funds from a linked account, credit card, or line of credit.
Banks and credit unions have varying fees associated with overdraft protection. When shopping for a checking account, ensure you ask what the account terms are regarding the cost of overdraft protection, a linked account, or a line of credit.
Deposits to your account may not be available for your use. Always ensure that you have enough available funds in your account. Even if you just initiated a deposit, you may still overdraw your account.
You can overdraw your account through checks, ATM transactions, debit card purchases, automatic bill payments, and electronic or in-person withdrawals.
How Does an Overdraft Work?
There are two major types of overdraft: arranged and unarranged
An arranged overdraft is when you agree to a limit that lets you spend more money than you have in your account. This could help you manage your money if you have to cover short-term expenses like an emergency bill.
An unarranged or unauthorized overdraft, on the other hand, is when you spend more money than you have, and you haven’t previously arranged an overdraft limit with your bank, or you have surpassed your existing overdraft limit.
Always remember that both types of overdrafts come with charges. However, you’ll only have to pay interest if you leverage it. This interest charge is dependent on your account. You should contact your bank and make inquiries before applying for an overdraft.
How Do I Apply for an Overdraft?
Having understood what an overdraft is, it’s best you know how to apply for one should the need arise.
That said, how do you apply for an overdraft?
You can apply for an overdraft when opening a bank account.
Do you wish to apply for an overdraft with your current bank? Of course, it’s possible. You can do that through the mobile banking app, online banking, over the phone, or in-branch, whichever you find convenient.
Sometimes you will get a reply pronto, or it may take some days if more info is needed or you have applied outside of normal banking time. The same process is needed if you want to increase an existing overdraft.
What Overdraft Limit Will I Get?
Overdraft limits aren’t fixed. They depend on many factors, one of which is the bank you are applying for. Most of the prominent banks out there provide some form of overdraft protection, which shouldn’t surprise you, given that overdraft charges help banks make money.
However, not all bank accounts have this privilege. For instance, basic accounts or accounts that have undergone bankruptcy of an IVA don’t tend to have access to an overdraft facility.
Even if you apply for a bank account product with an overdraft facility, you won’t often have access to the overdraft perk; it’s entirely at the bank’s discretion and “subject to status.” Your creditworthiness will be inspected by the bank in question when you apply for the overdraft, and factors like your age, earnings, and credit rating will also be looked at. Based on the bank’s discovery, you’ll be given a personally tailored overdraft facility.
How Long Can I Have an Overdraft?
Unlike repaying loans, which are fixed repayment over some time, overdrafts are a form of revolving credit, like credit cards. This means that you can add to an existing overdraft (provided you stay within your authorized overdraft limit), or pay it off totally one day, then use it the next. Overdrafts are available for as long as the bank authorizes them and as long as you settle the fees and charges associated with them.
Withdrawing Money From ATM With Overdraft Protection
With overdraft protection, you can make transactions even when you have inadequate funds in your account. But what happens when it comes to withdrawing money? Can you withdraw money from an overdraft account?
Of course, you can. And how do you do that?
You can withdraw money from the ATM with overdraft protection the same way you withdraw money from a typical bank account. All you have to do is walk to an ATM, preferably that of your bank, slot in your debit card, and withdraw the money you need. However, remember that if you have agreed to an overdraft limit, you’ll need to stick to it. Withdrawing more than the overdraft limit you agreed with your bank can result in expensive charges or worse sanctions.9