Payday Loan and Bank Overdrafts

Many people would ask why they should select payday loans service if banks provide overdraft protection for holders of checking account. How is it possible that a cash advance is a reasonable choice when banks can manage this for you? Overdraft protection may sound like a perfect service the bank covers the financial difference when you appear a bit short however this facility often costs a fortune. Actually unlike payday loans, overdraft protection fees may easily spiral out of control, resulting in more debts and causing additional overdraft charges.


When a person performs a payment, withdraws money, or issues a check for a sum that exceeds the current account balance, the account gets overdrawn. If your account is overdrawn, the bank can cover the missing amount so your check or credit card purchase won’t be bounced.

  • Generally your bank has this facility, also known as overdraft protection, as one of the checking account terms, so ensure you know this feature.

Overdraft Protection

If overdraft protection is included in your account facilities and the bank covers the money difference between actual balance and the sum you need, debit withdrawn from an ATM, the bank will charge overdraft fees. In most cases overdraft fees come up to $35 no matter of the sum your bank covers.

Check the balance even for minor purchases to avoid paying a bunch of overdraft fees. In fact, overdraft fees add up very fast, leaving you in a debt trap.

If the bank does not provide an option of paying your difference as overdraft protection is not indicated in your checking account agreement, you will have to pay a non-sufficient funds fee or a bounced check will be charged. The organization or individual trying to use your payment also has the right to charge you a fee known as returned check fee.


Now that you know the truth about overdrafts you may want to know how to avoid overdrafts and extra costs they involve. First of all, you should control your expenses and maintain an organized bank account. To know the exact balance, and control outstanding charges that are to be processed, use a toll-free automated number provided by the banks to check the available balance of your account. Most banks also provide online banking facility so it is possible to check your balance whenever you want.

It is a good idea to use payday loans to avoid overdrafts. Short term loans provide fast money required for you to keep on track. The loan fee is significantly lower than NSF fee or an overdraft and occurs just once in the loan duration, thus you always know what to expect. All this makes payday loan service much easier to use so you won’t have to deal with overdrafts in the future.

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