Both overdraft protection and credit cards are basically personal credit lines. They bring you money that you have to pay back, often with interest. Can you overdraft on credit cards?
There is really no such thing as overdraft.
This is because credit card issuers should not approve card transactions that exceed the limit unless you explicitly agree to the exceeding of the limit.
Usually, you also don’t use the term “overdraft balance” when it comes to spending more on your credit card than what you have available; for credit cards this is usually referred to as “overdraft.” Overdraft is a deadline that should be used if you spend more money than is available on your checking account.
How debit works
If you have current account protection at your bank, you can spend more than the actual amount on the attached checking account. When you do this, the check will not be reflected. Instead, the bank honors it – ultimately increasing the amount. In exchange for this service you will pay bank interest on the amount by which you transferred your account.
Some overdraft facilities will charge you for each overdraft facility, and some have annual fees instead of or in addition to overdraft fees. Since an overdraft facility basically sets up a personal credit line, the amount that the bank will allow you to borrow will depend to some extent on your creditworthiness, as well as on your own bank policies.
How does the credit card work
The credit card also acts as a credit line, in particular a revolving line (which means it is flexible and open, as opposed to a limited loan that must be repaid within a specified period). This line is equal to the credit limit – that is, how much you can charge with the card.
Whenever you use a credit card, you basically borrow money from a credit card company to buy goods or services. After receiving your monthly statement, you pay the company the money it paid you.
Pay by credit card check
Your credit rating may also be affected if a check written to cover your credit card payment is returned due to insufficient funds. This happens when there is not enough money in your checking account to cover the payment and the bank is not paying the transaction.
In this case, the credit card issuer will charge you a refundable check fee. If you don’t make the payment within 30 days, your account will be reported to the credit bureau and it will affect your credit standing.
Carefully secure the shortfall with a credit card
For those who are struggling with a shortage of wages and expenses, exceeding the balance is often a necessary remedy.
Debit entry – especially unacceptable – can be costly.
If debit entry is a monthly event due to a regular shortage of money, paying by credit card for a specific period of each month can help some people save money.