What is an Overdraft?
An overdraft happens when you don’t have enough in your account to cover whatever transaction occurs (this could be a purchase that cost more than you expected and had in your checking account, an automatic payment you forgot about that pulled more money than you had in your account, etc).
When your account overdrafts, and you don’t have the funds to cover your purchases or automatic payments, there are several options for what can happen next. Read below to see what option is best for you!
Overdraft Protection is the best (and most affordable) way for you to prevent overdrafts on your checking account and incurring a fee. With free overdraft protection, you can link additional Red Canoe accounts to your checking account, so if you don’t have the funds available in your checking account to cover the transaction, the funds needed to cover the payment will automatically transfer into your checking account to cover you and help you avoid a fee.
Let’s pretend the image on the right is your account.
You have $300 in your account, available and ready to spend. You’ve made out a $20 check to a friend, and the check clears, subtracting $20 from your account and leaving you with $280.
That night, you decide to go out to dinner with a friend and cover the bill. It ends up being $60, but instead of coming out immediately and updating your balance, it has a “hold” on it. So while your account balance may show you haven’t spent that money, your available balance will show that the $60 is no longer available.
The next day, you go grocery shopping ($50) and your dinner charge finishes going through, leaving you with $170. You see that’s what you have available, so you go at withdraw $40 from the ATM for lunch and coffee over the next few days, leaving you with $130 in your account.
But, you took that $40 out of your account, forgetting that the next day you have an automatic payment for your car insurance ($150). This comes out, making you reach negative $20 in your account.
This -$20 would be considered an overdraft (you pulled more from your account than you had available!). With Overdraft Protection, any transaction that overdrafts your account is covered as long as you have enough funds available in the account you set up to transfer from to cover the over-drafted amount. So in this example if there was $20 available in your savings, and you had Overdraft Protection set up, it would pull the $20 from your savings account and you wouldn’t be charged a fee.
If you did not have Overdraft Protection, but had qualified for Standard Courtesy Pay only (scroll to read more) you would have been charged a $30 NSF (Non-Sufficient Funds) fee each time you overdrafted your account.
Wanting to enroll? Call our Member Service Center at 800-562-5611 or visit your local Red Canoe branch to have Overdraft Protection set up for your account!
Overdraft Line of Credit
For those who qualify, an Overdraft Line of Credit allows you to cover transactions that overdraw your checking account by pulling from a line of credit. You can also use your Red Canoe VISA credit card to pay potential overdrafts.
For example, you have $100 available in your checking account. Your monthly car insurance payment of $250 automatically comes out, but you only have enough in your account to pay for $100. Because you have an Overdraft Line of Credit, the remaining $150 for your insurance payment is automatically transferred from your line of credit into your checking, leaving your account balance at $0. This allows your payment to go through and keeps your account from being overdrawn.
Note: Interest will accrue at your qualifying rate from the time the amount transfers to your checking until you pay the loan amount in full.
To enroll, call our Member Service Center at 800-562-5611 or visit your local Red Canoe branch.
- Any overdraft, up to the maximum amount of your line of credit limit
Standard Courtesy Pay
All eligible* Red Canoe members with checking accounts are automatically enrolled in Standard Courtesy Pay.
In our example of the automatic insurance payment that came out, if you only had $100 in your checking and qualified for Standard Courtesy Pay (but hadn’t set up Overdraft Protection), the Credit Union would allow the payment to go through cover the remaining $150 you owe. As this is a service provided by the Credit Union, a $30 NSF (Non-Sufficient Funds) Courtesy Pay fee will occur for each transaction where the Credit Union has to cover these costs.
If this did occur, you are responsible for bringing your account balance back to $0. In our example, this would mean that your account would be -$180 ($150 of which was for the remaining balance of your payment that the Credit Union covered, and $30 for the NSF fee that occurred because the Credit Union allowed the transaction to go through so you weren’t late on your payment). You would then have to deposit $180 back into your account to bring it to $0.
- Paper checks
- ACH transactions (automatic payments)
- Online Bill Pay transactions
- Recurring Debit Card Transactions (Netflix, Spotify, utility payments, etc.)
Debit Courtesy Pay
Debit Courtesy Pay is an optional service that covers your every day debit and ATM transactions that are more than the available balance in your checking account.
Let’s say you were at the grocery store, getting ready to check out. Currently, you only have $50 in your checking account available to use. But, as you’re being rung up, you see that your grocery bill comes out to $100. If you were enrolled in Debit Courtesy pay, even though you only have $50 in your checking account, your purchase would be approved and you’d be able to check out as we would cover the $50 difference. Because this is a service the Credit Union provides, you’d be charged a $30 NSF (Non-Sufficient Funds) Courtesy Pay fee.
If this occurred, your account would be $-80 ($50 we covered for your groceries, and the $30 NSF fee that occurred because the Credit Union allowed the transaction to go through and took on the remaining cost of your purchase). To bring your account balance back to $0, you would need to pay $80. Each time you make a purchase without having available funds, you would be charged a $30 NSF Courtesy Pay fee.
If you were not opted-in to Debit Courtesy Pay, at check out your card would be declined and you would not be charged a fee and would not be able to make your purchase.
To enroll in Debit Courtesy Pay, call our Member Service Center at 800-562-5611 or visit your local Red Canoe branch.
- Every day debit card transactions
- Every day ATM transactions
- (Recurring debit card purchases are NOT covered)
Overdraft Program Disclosures
- Eligibility for Standard Courtesy Pay is discretionary and not guaranteed.
- Posting Order – Transactions post throughout the day, and are generally posted using your available balance in the order received.
- There is a limit of eight non-sufficient fund (NSF) fees that may be charged on any one day. A fee may be imposed for covering overdrafts created by check, in-person withdrawal, ATM withdrawal, or other electronic means.
- We will not charge a fee if your account is overdrawn $5 or less.
- The overdrawn amount in your account plus any overdraft fee that you owe Red Canoe shall be due immediately and payable on demand.
- Whether your overdrafts will be paid is at Red Canoe’s discretion, and we reserve the right not to pay. For example, we typically do not pay overdrafts if your account is not in good standing, or if you are not making regular deposits, or if you have a high number of overdrafts.
- There is an NSF fee for each overdraft check or item we pay or return as set forth on the Rate and Fee Schedule. If you would like to opt-out of Courtesy Pay, please visit a branch or call (800) 562-5611.