A Guide to Overdrafts

We have all been there. You make a purchase and later realize your account balance was lower than you thought. It happens, and you are not alone.

That is where overdrafts come in. Once you understand how they work, they are easy to manage and even easier to avoid.

At Red Canoe Credit Union, our goal is to help you feel confident and in control of your money.

 

What Is an Overdraft?

An overdraft happens when a transaction tries to come out of your account, but there is not enough money available to cover it.

When this happens, you have options for how the transaction is handled. Those choices can determine whether the payment goes through and whether a fee is charged.

 

You Are in Control

When your account balance is not enough to cover a transaction, you can choose how you want it handled. Here are the main options available:

 

Transfer It

Overdraft Transfer Protection

This feature automatically moves money from your savings or another account to cover the difference when your checking account runs low.

• No fee
• No limit on how often it can be used
• Easy to set up in Online Banking

This is the simplest way to avoid overdraft fees while keeping your transactions running smoothly.

 

Cover It

Courtesy Pay

If there is no money available to transfer, Courtesy Pay can cover the transaction for you, up to a set limit. 

• $30 fee per transaction
• Helps prevent missed payments or service interruptions

This service is optional, and you can remove it at any time if you prefer to avoid fees.

 

Cover It for Everyday Purchases

Debit Courtesy Pay

You can also choose to extend coverage to everyday debit card and ATM transactions.

• $30 fee per transaction
• Requires opt in

If you do not opt in, everyday debit purchases may be declined when funds are not available.

 

Decline It

You can choose to opt out of all overdraft coverage.

• Transactions will be declined if there are not enough funds
• No overdraft fees

This option works well if you want a strict approach that helps you avoid fees altogether.

 

Real Life Examples

Understanding how this works in everyday situations can make things clearer.

 

Grocery Store Purchase

You spend $200 on groceries, but your account balance is $150.

• With Overdraft Transfer Protection, $50 is transferred from your savings and the purchase goes through without a fee
• With Debit Courtesy Pay, the transaction goes through with a $30 fee
• Without coverage, the transaction is declined 

 

Automatic Bill Payment

You have an automatic bill for $200, but your balance is $150.

• With Overdraft Transfer Protection, $50 is transferred from your savings with no fee
• With Courtesy Pay, the payment is covered with a $30 fee so your service continues uninterrupted
• Without coverage, the payment is declined

 

The Easiest Way to Avoid Fees

If your goal is to avoid overdraft fees, the best option is to set up Overdraft Transfer Protection.

It is free, automatic, and helps make sure your transactions are covered without added cost.

 

We Are Here to Help

Everyone manages their money differently, and there is no one right approach. Whether you want to avoid fees completely or keep payments from being interrupted, you have options.

If you have questions or want help choosing what works best for you, our team is here to help.