Money Moves

What is Overdraft Protection

Overdraft Protection 101
What is it, why should I use it, and how can I get the most out of it?

Let’s set the scene: you’re next in line at the grocery store, you’ve got all your items ready to go, but then you start to panic. Do I have enough cash in my account to cover this? Uh oh, your items are totaled and it’s time to pay. That’s when the real Swipe-a-phobia sets in. Either you swipe and your payment is declined because you don’t have enough in your account, or you overdraft your account and get slammed with fees. Either way, it feels like your account is toast.

Enter overdraft protection¹, here to save the day. But what is it and how can you use it without racking up fees? Well, buckle up, dear reader, because we’re taking you on a journey that will hopefully teach you a little bit about how to stay covered and confident with your money.

What is overdraft protection?
How does it work?
How can I avoid overdraft fees?
How is GO2bank’s overdraft protection different?

What is overdraft protection?

Overdraft protection is a service your bank provides to protect you from having insufficient funds when it comes to swiping time. If you spend more than what you have in your account, the overdraft protection covers the purchase, but will typically charge a fee for allowing you to make your purchases. Overdraft protection will also typically limit how many overdrafts you can make in a certain period of time, and how many overdraft fees you can be charged.

How does it work?

Most banks offer overdraft protection, which can vary, but one thing they all have in common is you must opt in to receive the service. Some banks let you opt in right out of the gate after opening an account, which might seem like a good thing, but might also mean racking up overdraft fees quickly. . To stay covered at GO2bank, you need to first set up and receive eligible direct deposits before you can opt in. After you opt in, you’ll be given a coverage amount based on your past and present relationship with us, which includes your direct deposit’s frequency and amount.

Think of it this way: You’re buying school supplies and spend $135 at the store but only have $100 in your debit account. Your bank is kind of like that nice person in line behind you who says, “I got you” and spots you the extra $35 so you can make the purchase and get on with your day. But that person, aka your bank, still expects you to pay them back that $35, and expects you to pay a fee on top of it since they were so nice for loaning it to you. And if you go straight to another store and keep overdrafting your account, your bank will still protect you up to a certain amount but you can expect a fee each time you overdraft.

So, the trick is to find the nicest person behind you in line, aka GO2bank.

How can I avoid overdraft fees?

Before opting in for overdraft protection, your bank should let you know five important things:

What type of transactions are covered
How much the bank covers in overdraft protection
How much your overdraft fee will be each time you overdraft
How to avoid fees
How many overdraft fees you can be charged in a day/month/statement period

Some banks, like GO2bank, offer a grace period if you return your balance to at least $0 within a certain amount of time. If you overdraft your account but have cash on hand or money stashed away in a savings account, you can add it back to your debit account to avoid getting hit with that overdraft fee.

The easiest way to avoid overdraft fees? Keep your account balance positive at all times. We know that can be easier said than done some months. But with the GO2bank app, you can set alerts² to remind you that your balance is low, notify you when a direct deposit posts to your account, and more. This can help you keep track of your balance and avoid making any purchases you can’t cover on your own.

How is GO2bank’s overdraft protection different?

Compared to big banks, eligibility for overdraft protection is way easier with GO2bank, and we charge way less fees per month if you frequently overdraft your account. Once you set up eligible direct deposits and opt in, you won’t be charged an overdraft fee for any transaction that’s less than $5 or that overdraws your account by no more than $10. You’ll never be charged more than $150 in overdraft fees per statement period. And the more direct deposit you receive, the more you'll be covered in overdraft protection, even reaching up to $200 in coverage for every purchase. Because that’s what your GO2 is for.

Here's a helpful break down of what GO2bank's overdraft protection covers:

Types of transactions – Purchase transactions (no ATM, checks, fund transfers, or bill pay)

How much is covered – Up to $200

How much are fees – No fees if you overdraw $10 or less, otherwise $15 per overdraft

How many fees – Maximum of 10 fees ($150) per statement period / 10 overdraft transactions per statement period

How to avoid fees – Bring account to at least $0 within 24 hours of the first authorized transaction

Ready to get covered? Set up direct deposit and opt in here.

The views and opinions expressed here may not represent the views and opinions of GO2bank, Green Dot Corporation, or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal, or business advice.

The GO2bank Blog may contain hyperlinks to sites that are not operated by GO2bank. The GO2bank Privacy Policy does not apply to the linked sites, and you should consult the Privacy Policies on those sites for further information. GO2bank does not provide and is not responsible for the product, service or overall content on those sites.

¹Opt-in required. Account must be in good standing and chip-enabled debit card activated to opt in. Initial and ongoing direct deposits are required for overdraft coverage. Additional criteria may apply which can affect your eligibility and your overdraft coverage. Overdrafts are paid at our discretion. Overdraft fees may cause your account to be overdrawn by an amount that is greater than your overdraft coverage. A $15 fee may apply to each eligible purchase transaction that brings your account negative. Balance must be brought to at least $0 within 24 hours of authorization of the first transaction that overdraws your account to avoid a fee. Learn more (Overdraft Protection PDF).

²Message and data rates apply.

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The views and opinions expressed here may not represent the views and opinions of Green Dot Corporation or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.

The GO2bank Blog may contain hyperlinks to sites that are not operated by Green Dot. The Green Dot Privacy Policy does not apply to the linked sites, and you should consult the Privacy Policies on those sites for further information. Green Dot does not provide and is not responsible for the product, service or overall content on those sites.

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