Overdrafts and Balance Requirements

An overdraft occurs when a bank pays a transaction despite insufficient available deposit funds. Overdraft protection can instead move linked deposits, draw on credit, or provide another form of coverage. The funding source determines whether the event uses the customer’s own money, creates debt, or leaves the account negative.

Minimum balance requirements set account thresholds for fees, benefits, or eligibility. A compensating balance is tied to a credit or banking-service arrangement and can increase its effective economic cost. An Earnings Credit Rate instead converts eligible analyzed balances into credits against specified commercial banking service fees.

Start with the agreement, available balance, transaction outcome, linked funding source, fees, interest, and repayment terms. Do not assume overdraft enrollment guarantees payment or that a required balance remains freely available for other uses.

This section is educational, not individualized borrowing or account-selection advice.

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