An overdraft can occur when you try to spend more money than you have available in your checking account. For example, let’s assume you have $40 in your account. You ask the phone company to electronically deduct $35 from your checking account to pay the bill. You now have $5 available. Next, you use your debit card to make a $10 purchase. You could overdraw your account if the bank allows the $10 purchase to be processed. This could cost you expensive overdraft fees. The amount you are overdrawn plus your bank’s fees will be deducted immediately, in full, from your next deposit(s) -- including from payroll deposits made by your employer, government benefit deposits, and other direct deposits on which you may depend. These deductions will lower your account balance once again and may increase the risk of more overdrafts and costly fees.
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