Blog
back

Can You Overdraft a Credit Card, Debit Card, or Savings Account

January 14, 2021

Overdraft protection is a banking service consumers can opt into to overdraw their checking accounts for a fee. For instance, if your account only has $10 in it and you forgot about your upcoming $15 Netflix subscription, your payment will still go through because 1) your bank can loan you $5, or 2) you have a backup account linked. Your bank will charge you an overdraft fee either way, and Bankrate reports that [the average fee is $33.47](https://www.bankrate.com/banking/checking/checking-account-survey/#:~:text=The%20average%20overdraft%20fee%20(%24,interest%20checking%20account%20(%245.27).).

“Can I overdraft my debit card?” you ask yourself. “What about my credit card? Or my savings?” You know it’s possible to overdraw your account with online payments, and you’ve heard of people doing it with checks, so it’s understandable to wonder what other kinds of accounts allow you to make transactions without sufficient funds. If we’re going to use the term “overdraft” as a verb, let’s dive into the possibilities.

Can You Overdraft a Debit Card?

Yes, you absolutely can overdraft a debit card.

Let’s say you had $5 in your account this morning, but today is payday, so you should have plenty of money by the afternoon. Unfortunately, your employer’s payroll system takes longer to deposit your paycheck, so you won’t have the funds you expect some time until next business day. You use your debit card to buy a $7 slushie from the convenience store without knowing your real balance. The transaction goes through because you have overdraft protection, but now you owe the bank $35.47 — $2 for what it loaned you and $33.47 for the service.

You can call the bank and try to explain, but you just purchased a really expensive slushie if they decide not to waive the fee. It was such a small difference, too, but overdraft fees are fixed. Your debit card is connected to your checking account, so debit card overdrafts are a common way to incur such fees.

In addition, banks will often set overdraft limits. Even if you have overdraft protection, this means you cannot borrow more than your bank will allow if you overdraw your account (such as $500 or $1,000).

Can You Overdraft a Credit Card?

No, a credit card overdraft is not a thing — at least, not exactly. Because using your credit card entails borrowing money from your credit issuer, there is technically no finite amount of money in an account to withdraw from.

However, it is possible to reach and exceed your credit limit. Your credit limit is the maximum amount of money your issuer is willing to let you borrow. This number varies between different cards, institutions, and individuals, so it could be as little as $200 (such as putting down a deposit on a secured card) or as much as $500,000. Your card will decline if you attempt to make a purchase that pushes you over your credit limit.

Unless you have over-limit coverage, that is. Similar to overdraft protection, over-limit coverage is a service you must opt into with your credit issuer that enables you to exceed your credit limit in exchange for a fee. Your bank cannot charge you fees for reaching your limit, only if you agree to surpass it.

Keep in mind, though, that using too much of your available credit could negatively impact your credit score. Experts suggest using approximately 30% of your credit limit. For instance, if you have $15,000 in available credit, then making more than $4,500 worth in purchases or expenses could make you seem like a risky borrower.

Can You Overdraft a Savings Account?

Fortunately, a savings account can only be emptied, not overdrafted. That said, different rules influence your ability to withdraw from your savings.

US law dictates that you cannot make more than six convenient withdrawals from your savings account per month (“convenient” includes transfers made via phone, online, check, etc.). Your bank may charge you a fee if you exceed this number of withdrawals or refuse the transaction. However, it’s possible to exceed the six-withdrawal limit if you use “inconvenient” methods, such as visiting a bank branch in person, taking out cash from an ATM, or requesting a check.

How Can You Avoid Overdraft Fees?

Though you cannot overdraft savings accounts or credit cards, it’s beneficial to be careful with your checking account, so you avoid overdraft fees. A few ways you can elude overdraft fees include:

  • Opting out of overdraft protection;
  • Enabling low-balance alerts, so you know when you are at risk of overdrawing your account;
  • Linking your checking account to your savings as a backup.

You can also use financial apps to manage your various accounts and keep a watchful eye on your financial situation. If you have a low balance with no choice but to pay a necessary expense, then Earnin allows you to access up to $100 per day from your paycheck before the typically scheduled date without taking out a loan. Likewise, Mint is helpful for budgeting, and Peak can help you visualize your financial goals.

You’re not alone if you’re worried about overdrafting, but rest assured, you cannot overdraft a credit card or savings account.


Photo by Timeo Buehrer on Unsplash

Please note, the material collected in this blog is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or Services.

1Disclaimer: Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

2Disclaimer: Balance Shield cash out is subject to your available earnings and daily pay period max. Other restrictions and/or third party fees may apply. For more information visit earnin.com/TOS.

3NO PURCHASE NECESSARY TO ENTER OR WIN. Must be 18 years of age or older and a legal resident of the U.S. or DC. Games begin each Sunday starting 12/6/20 at 9:01 p.m. ET and end the following Monday at 9:00 p.m. ET with the last Game ending 12/19/21. To download the App, view the Official Rules, odds disclosures, prize details, and alternate means of entry, visit https://www.earnin.com/wewin/. Void where prohibited. $10,000,000 grand prize payable over 29 years. Sponsor: Activehours, Inc. (d/b/a Earnin ®), 200 Portage Ave, Palo Alto, CA 94306.

4Disclaimer: Up to 2 days early is based on comparison with traditional banks. Exact timing is dependent on your employer's payroll policies. For more information on eligibility and requirements of Earnin Express, visit earnin.com/TOS.

5Source: Internal analysis conducted by Earnin on December 10, 2020.

1Restrictions on use of Services and/or third party fees may apply, see Earnin.com/ privacyandterms for details.

2Balance Shield cash out is subject to your available earnings and daily pay period max. Other restrictions and/or third party fees may apply. For more information visit Earnin.com/privacyandterms.

3Tip Yourself Account funds are held with Evolve Bank & Trust, Member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% APY and $0 monthly fee service. Other restrictions and/or third party fees may apply, see Earnin.com/privacyandterms for details.

1Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

2Restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

3Balance Shield cash out is subject to your available earnings and your daily pay period max. Other restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

4NO PURCHASE NECESSARY TO ENTER OR WIN. Must be 18 years of age or older and a legal resident of the U.S. or DC. Games begin each Sunday starting 12/6/20 at 9:01 p.m. ET and end the following Monday at 9:00 p.m. ET with the last Game ending 12/19/21. To download the App, view the Official Rules, odds disclosures, prize details, and alternate means of entry, visit WeWin Game & Sweepstakes Official Rules. Void where prohibited. $10,000,000 grand prize payable over 29 years. Sponsor: Activehours, Inc. (d/b/a EarninⓇ), 200 Portage Ave, Palo Alto, CA 94306.

5Tip Yourself Account funds are held with Evolve Bank & Trust, Member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service. Your Tip Yourself Account and any Tip Jars are not Savings Accounts. For more information/details visit earnin.com/tos.

6Up to two days early is based on comparison with traditional banks. Exact timing is dependent on your employer’s payroll policies. For more information on eligibility and requirements of Earnin Express, visit earnin.com/tos.

7Your Max on Earnin Express is up to 80% of your payroll or $1000, whichever is less. The 80% is dependent on you routing your full paycheck to Earnin Express. For more information on eligibility and requirements of Earnin Express, visit earnin.com/TOS.

8By using Cash Back Rewards (powered by Empyr) you allow participating merchants and/or card networks details of your transactions. For more information, see Earnin.com/tos.

9Learn how we collect and use your information by visiting our Privacy Policy.

1Disclaimer: Restrictions and/or third party fees may apply, see earnin.com/tos for more details. Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection.

2Disclaimer: Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see Earnin.com/TOS for details

3Disclaimer: Community Member must have had at least 1 successful debit with Earnin. Limit to 1 Max Boost per pay period. A boost will not adjust a Community member's daily max. Restrictions may apply, see earnin.com/tos for more details

*Disclaimer: Balance Shield cash out is subject toyour available earnings and daily pay period max.Other restrictions and/or thirdparty fees may apply. For more information visit earnin.com/TOS

1Restrictions may apply, see earnin.com/tos for more details. Tip Yourself Account funds are held with Evolve Bank & Trust, member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service. Your Tip Yourself Account and any Tip Jars are not Savings Accounts. For more information/details visit earnin.com/tos

2Disclaimer: NO PURCHASE NECESSARY TO ENTER OR WIN. Must be 18 years of age or older and a legal resident of the U.S. or DC. Games begin each Sunday starting 12/6/20 at 9:01 p.m. ET and end the following Monday at 9:00 p.m. ET with the last Game ending 12/19/21. To download the App, view the Official Rules, odds disclosures, prize details, and alternate means of entry, visit https://www.earnin.com/wewin/game-rules/. Void where prohibited. $10,000,000 grand prize payable over 29 years. Sponsor: Activehours, Inc. (d/b/a Earnin), 200 Portage Ave, Palo Alto, CA 94306.

3Disclaimer: Restrictions Apply. See earnin.com/tos for more information

*Disclaimer: Up to 2 days early is based on comparison with traditional banks. Exact timing is dependent on your employer's payroll policies. For more information on eligibility and requirements of Earnin Express, visit earnin.com/TOS.

**Disclaimer: Restrictions and/or third party fees may apply, see earnin.com/tos for more details. Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection.

*(*) Internal analysis conducted by Earnin in January 2021, represents total users who Cashed Out at least once from January 1 to December 31, 2020.

Download on the App Store
4.7 +189K ratings
Download on Google Play
4.5 +147K ratings