GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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38% - Moderately

Overdraft Minimum Amount


Synonyms:minimum funds transferred, overdraft policy
Filed Under: financial-banking
Tags: banking
 

Definition of overdraft minimum amount

overdraft minimum amount
1. This is the minimum amount of funds that a banking institution will transfer from a savings account to a chequing account if there are non-sufficient funds (NSF) available to cover a debit charge or cheque withdrawal. For example, a bank may have an overdraft minimum amount of $25. If the account balance is $100, and a cheque in the amount of $119.87 is cashed, the bank will advance the account-holder $25, rather than the $19.87 overage

Related Terms and Acronyms:

  • cheque clearing   When you write a cheque to a person or a company, the cheque is typically cashed when deposited into a bank account. Your chequing account is then debited for the amount of the cheque and the cheque is said to have "cleared."
  • chequing account   A bank account that allows quick access to the money in the account.
  • clearing and settlement (C&S)   The process whereby banks collect or pay out for items drawn on or paid into accounts in their institution. This process enables banks to accept each other's cheques and bank drafts for deposit. The Canadian Payments Association operates Canada's clearing system.
  • float   The amount of time the bank takes to clear or reject a cheque for payment
  • insufficient funds (ISF)   When funds are not enough to satisfy the payment of a cheque or draft made on that account; also known as non-sufficient funds (NSF).
  • overdraft (DR)   The amount that a cheque exceeds the available balance in the payor's account; also insufficient funds.
      ➥  Bank account transaction code.
  • overdraft protection   A service that allows a chequing account to be linked to another savings or line of credit to provide protection against insufficient funds or overdrafts.
  • savings account   A financial account that pays interest with low risk.

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