What term describes fees charged when a payment overdraws an account?

What term describes fees charged when a payment overdraws an account?

• A. Overdraft fee
• B. Service charge
• C. Maintenance fee
• D. Interest charge

Answer: (A)

Overdraft fee describes the charge you incur when a payment overdraws an account. When you spend more than the available balance and the bank covers the shortfall, they may apply an overdraft fee, often per item or per day depending on the account terms. This is different from a service charge (a general fee for basic account services), a maintenance fee (a recurring monthly charge for simply keeping the account), or an interest charge (charged on borrowed money). If you want to avoid it, you can use overdraft protection with a linked savings account or line of credit, or ensure transactions are declined when funds aren’t enough.

Overdraft fee describes the charge you incur when a payment overdraws an account. When you spend more than the available balance and the bank covers the shortfall, they may apply an overdraft fee, often per item or per day depending on the account terms. This is different from a service charge (a general fee for basic account services), a maintenance fee (a recurring monthly charge for simply keeping the account), or an interest charge (charged on borrowed money). If you want to avoid it, you can use overdraft protection with a linked savings account or line of credit, or ensure transactions are declined when funds aren’t enough.