GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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38% - Moderately

Overdraft Protection


Synonyms:automatic protection, instant credit, no-bounce policy, safety net
Filed Under: financial-banking
Tags: banking
 

Definition of overdraft protection

overdraft protection
1. A bank service that links a chequing account to either a savings account or line of credit to provide protection against non-sufficient funds (NSF) charges, bounced cheques and declined transactions.

Related Terms and Acronyms:

  • call deposit account   A bank account that combines some features from both savings and checking accounts.
  • 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."
  • 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).
  • nsf   NSF means Non-sufficient Funds.
  • number of free transactions per month   The number of transactions an account holder is allowed to make before being charged a fee. If the limit is exceeded, a per-item charge is applied. Some accounts offer an unlimited number of free transactions or no free transactions per month.
  • over-the-limit fee   A fee charged for exceeding the credit limit on the card.
  • overdraft annual cost   A fee charged by the bank to cover the overdraft feature on a client's chequing account. The client pays the fee even if the overdraft protection is never activated. This fee may be charged in addition to the one-time fee.
  • overdraft minimum amount   Minimum amount that will be transferred to the accountholder's account if a potential non-sufficient funds (NSF) situation occurs.
  • 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.

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