Beware of the overdraft protection

An overdraft protection is a feature of a checking account in a bank. It allows an account holder to withdraw money even if that would mean the balance will go below zero. It is as good as the bank giving you an instant (very high interest) loan. With an overdraft protection, one can not only avoid a bounced-check fee but also the embarrassment of issuing a check that bounced. However, there is a limit to how much lower you can go below zero. It depends on a lot of factors – some defined and some subjective. For example, if your average balances are in the range of a few thousand dollars, I doubt any bank would allow an overdraft of hundred thousand dollars.

Life works the same way when it comes to making requests to people. You first make a deposit and then you make a withdrawal. However, you can make a withdrawal without having enough balance – meaning you can get the benefit of an overdraft. It works like magic when it works. But it’s not long lasting.


Because everyone has an overdraft protection limit. When you breach that limit, you risk getting a black mark on your account or getting your account removed altogether.

Anyone who can provide good help gets a lot of help requests. Part of these requests come from people who are not thoughtful enough to recognize the accounting rules and more importantly overdraft protection limits. I am sure you are not one of them. But if you know a friend who might be in this category, it is your responsibility to tell them (directly or indirectly) because they may be doing this just because they are not aware of the damage they are causing themselves.

Remember, friends don’t let friends breach overdraft protection limits.

Photo: vinspired_voicebox on flickr.