Overdraft Fee

An overdraft fee is a fee charged by a bank when a customer withdraws more money than is available in their account. This fee is typically charged when a customer writes a check for more money than is in their account, or when they use their debit card to make a purchase that exceeds their available balance. Overdraft fees are typically charged as a flat fee, but some banks may also charge a percentage of the overdraft amount.

History of Overdraft Fees

Overdraft fees have been around since the early 1900s, when banks began offering customers the ability to overdraw their accounts. Initially, banks charged a flat fee for each overdraft, but in the 1970s, banks began charging a percentage of the overdraft amount. This allowed banks to make more money from overdraft fees, as the amount of the fee was based on the size of the overdraft. In the 1980s, banks began offering overdraft protection services, which allowed customers to link their checking accounts to a savings account or line of credit. This allowed customers to avoid overdraft fees by transferring funds from their savings or line of credit to cover any overdrafts.

Comparison of Overdraft Fees

Summary

Overdraft fees are fees charged by banks when customers withdraw more money than is available in their accounts. Overdraft fees have been around since the early 1900s, and banks typically charge a flat fee or a percentage of the overdraft amount. Customers can avoid overdraft fees by signing up for overdraft protection services, which allow them to link their checking accounts to a savings account or line of credit. For more information on overdraft fees, customers can visit the websites of their banks or the websites of financial institutions such as the Federal Reserve.

See Also

• Overdraft Protection
• Checking Account
• Savings Account
• Line of Credit
• Debit Card
• ATM Fee
• Minimum Balance Fee
• Monthly Maintenance Fee
• Returned Item Fee
• Non-Sufficient Funds Fee

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