Some smaller, community banks permit overdrafts on new accounts but with lower overdraft limits. In addition some banks require you to setup and receive direct deposits to be eligible for overdrafts. Most banks like to see a bit of a track record before paying out overdraft transactions on new accounts.įor example, Citizens Bank won’t pay overdrafts on accounts that have been opened less than 60 days, while new customers aren’t eligible for overdraft protection from Navy Federal until their accounts are at least 90 days old. So banks don’t love taking the risk of extending overdraft privileges to customers that they don’t know well. With fees that typically cost you $35 per transaction, overdrafts are a wildly profitable source of profits for banks – they make over $15 billion a year off of them! However, if a customer doesn’t repay an overdraft, the bank loses money and often incurs significant expenses to try to collect what the customer owes. The bank expects that you’ll soon make a deposit to your account to cover the amount of the overdraft (and any fees) and bring your account balance back above zero.
Your bank has decided to pay a transaction, such as a bill payment or ATM withdrawal, even though you don’t have enough money in your account. Will traditional banks let you overdraft right away?Īn overdraft is essentially a small, unexpected loan. Plus, we’ll reveal some great apps that can help you access cash when you need it, with no interest and no credit check. The good news is that there are a handful of banks that will let you overdraft your account right away, as well as some steps you can take to quickly increase your access to overdrafts. You may discover (often at a very inconvenient moment) that many banks don’t allow customers to overdraft new accounts right away, and sometimes may make you wait several months before you can access overdraft privileges! However, there can be a few hassles when you move your money to a new bank, such as changing your direct deposit and bill payment information.Īnd there may be some unexpected surprises as well.
We may earn a referral fee when you sign up for or purchase products mentioned in this article.Ĭhanging banks can help you pay lower fees, obtain attractive rates on a mortgage or credit card, or may just make it more convenient to manage your money. Editor’s Note: Overdraft Apps provides detailed product reviews and recommendations based upon extensive research and our own hands-on testing.
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