Section: Banking Lesson: NSF vs Overdraft This Section: Banking This Lesson... NSF vs. Overdraft “Does It Matter?” personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Spend More Than You Have…? Your bank or credit union can… Reject the payment… • Called “Returned for NSF” • NSF = Insufficient Funds Go ahead and pay it for you… • Called “Overdrafting Your Account” • Seller doesn’t know personal finance Both can incur fees and maybe more bsnsAtlas.com teaching bsns basics © All Rights Reserved If Payment Is Declined By Your Bank… Paying by credit / debit card • Seller will know right away • Not usually a fee by the seller or Financial Institution personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Page 1 Section: Banking Lesson: NSF vs Overdraft If Payment Is Declined By Your Bank… Paying by check – “bounced check” • Seller will be notified at a later date • Usually a fee by both the seller and your bank • Is a crime personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Overdraft Protection To be used in an emergency (not a cash loan to “get you through”) Your Financial Institution will… • Cover the shortage of the purchase • Usually charge a fee (most of the time it’s lower than fee for an NSF) • Keeps you on good terms with the seller personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Posting Order Transactions don’t always post in the order they exactly occur Different links in the chain • Retailer • Credit card processor • Bank, credit union, etc. personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Page 2 Section: Banking Lesson: NSF vs Overdraft Posting Order Financial Institutions process differently • Type of transaction • Amount • Processing systems • Some in real time; some not Applies to deposits as well as withdrawals personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved One Other Option… Automatic Transfer • Similar to Overdraft Protection • Have to opt-in • Transfer money from your own account • Still charge a fee • Usually not as much as Overdraft fee personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Things To Keep In Mind… • YOU are in control of whether you spend more than you have • Monitor your account • Not just what’s there NOW – What’s coming up • This is NOT a right… It’s a courtesy • If you take advantage of it, the courtesy can be revoked personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Page 3 Section: Banking Lesson: NSF vs Overdraft PROJECT • Research your Financial Institution’s policies • Identify the Overdraft Protection options personal finance bsnsAtlas.com teaching bsns basics © All Rights Reserved Coming Up Next… Credit Cards versus Debit Cards finance ersonal p bsnsAtlas.com teaching bsns basics © All Rights Reserved Page 4.