Overdraft protection can save you money on fees if your account balance dips below zero. But you\u2019ll pay a small fee for the convenience and be charged interest on the negative balance.<\/p>
Keep reading to learn all about how overdraft protection works, how much various banks in Canada charge for it and about alternatives to help you save even more.<\/p>
When your bank account goes into overdraft, it means that there wasn\u2019t enough money in your account to cover a purchase or withdrawal, so the transaction became a debt on your account. In that case, the bank allowed the transaction to go through, but will require that you pay that amount back into your account and will charge you fees plus interest on the overdrawn amount.<\/p>
Overdraft protection is a feature available to add on most chequing accounts in Canada that allows money to be withdrawn from your chequing account even when you don\u2019t have any money in your account without any overdraft fee.<\/p>
Keep in mind that while these chequing accounts do not charge overdraft protection fees, they may still charge interest on the overdrawn balance until it\u2019s repaid.<\/p>