Many people wonder how to overdraft at an ATM or how to overdraft with a debit card or how to overdraft with a credit card. To overdraft means to draw such an amount of money from your bank account that the balance goes into the negative. Fortunately, most US banks and credit card companies allow such overdrawing, understanding that you may have an emergency that will require extra funds. Thus, you can overdraft at ATMs. Overdrafting at an ATM is considered pre-authorized and the bank/credit card company will cover it. Even if a different bank’s ATM cannot communicate directly with your bank, it will typically allow for an overdraft to occur.
How to Overdraft at an ATM
“Can I overdraft at an ATM?” Yes! When you overdraft a debit card, you are really just overdrawing your checking account. Yes, you can overdraft at an ATM simply by overdrawing your balance. To keep out of trouble though, get overdraft protection. Overdraft protection is a banking service, offered by most of the banks in the US, which covers overdrafts at ATMs as well as with bill pay, etc. A good example is Bank of America’s ATM Overdraft service. This is an authorized overdraft service, where you need to agree with the bank’s terms and the bank pays your overdrawn amount. But there are restrictions and not all accounts are eligible for this service.
How Much Money Can I Take out of an ATM?
If you ask me how much money a person can overdraft at an ATM, I can’t give a satisfactory answer. It depends on the particular account holder. Depending upon the credit history and financial condition of the account holder, a bank decides the overdraft limit on a person-to-person basis. New account holders and account holders with low credit scores are usually granted a courtesy overdraft limit between $100 and $300. Good customers can often overdraft up to $1,000+. Though, some banks will never officially let you know your overdraft limit.
Allow me to present some discouraging statistics for frequent ATM users. According to 2015 Bankrate research, the average fee per withdrawal at an outside-network ATM rose to $4.52. Banks have come under criticism for imposing “record high” ATM overdraft fees, topping $30 in some cases. Following another study, most people using ATMs to withdraw money pay on average $35 per year in ATM overdraft fees and still, most of them don’t care to take coverage. But the fees may increase at a progressive rate every time you overdraft.
In short, unauthorized overdrafts are costly. It’s best to either get overdraft protection or avoid overdrafts altogether – because it is possible to overdraft at an ATM. If you want to know more about how much you can withdraw from an ATM (many banks are listed with their limits) then please read this article.
How to Overdraft with a Debit Card at an ATM
It’s simple. As stated above, you simply overdraw your account. For more details about overdraft fees, read this in-depth post about overdraft fees.
What does overdrawn mean on a debit card? It means you went into overdraft and you may just now realize it once you’ve seen that on your statement.
Can You Use a Credit Card at an ATM and Can You Overdraft a Credit Card at an ATM?
Yes and yes. Be aware – withdrawing cash on a credit card is expensive. There are nearly always fees, unless you have a special offer or rate on your card, and the interest rates charged to cash withdrawals generally surpass those of standard purchases charged to credit cards. While average credit card rates are around 20%, cash withdrawal rates are about 25%.
Though there’s no ‘overdraft’ fee per se. It’s possible to overdraft/overdraw a credit card at an ATM. The catch – similar to how you would have to call your credit card company to raise your limit if it isn’t enough, you will need to have pre-arranged the ability to overdraw your card. If this feature is enabled, you’ll be able to enter an overdraft via a credit card at an ATM.
Does an ATM Overdraft Affect Your Credit Score?
Not usually. For a debit card, an overdraft will take no affect on your credit score unless, as explained in this article, you don’t repay for months and the debt and it gets sent to collections.
Credit cards are a little trickier. Borrowing in any way, shape or form affects your credit score. If you withdraw cash on a credit card, it’s recorded on your credit score. Most lenders assessing your credit score would assume it’s a danger sign – perhaps that you had to withdraw from it because you couldn’t withdraw from your bank account if it was maxed out. Obviously it could be completely untrue but because of this withdrawing cash on a credit card should really only be a last resort – and entering your overdraft on one should be done with even less frequency.
Can You Overdraft at Every ATM and Will They Warn You?
An ATM of your own bank will definitely let you go overdrawn (providing your account has the option to overdraft). Of other banks, it will depend on their individual terms and conditions. If you can overdraft at an ATM of a bank you’re not a customer of, you may find yourself limited in exactly how much you can withdraw. It will also depend on factors such as does the ATM have enough cash in it – if it’s running low, you might not get as much as you are trying to withdraw.
Some banks are quite courteous when it comes to overdrafts. At Union Savings, ATMs will warn you if you are about to become overdrawn, giving you the option to cancel the transaction if necessary. Bank of America says its ATMs “may” give you the opportunity to agree to overdraft services for a withdrawal that exceeds your balance, meaning you could enter unwittingly. It’s all a bit luck of the draw, and really does vary from provider to provider.
Things to Know if You Plan to Overdraft at an ATM
- Use an ATM from your own provider (where possible) since overdrawing is closer to guaranteed
- An overdraft on a debit card doesn’t affect your credit score if you quickly pay it back in full.
- Overdrafting with a credit card is a negative side for lenders to see but there is no overdraft fee for a credit card. You just get charged a higher interest rate on cash withdrawals. Call your credit card company to withdraw more than your line of credit.
How to Avoid Overdrafting at an ATM
- Know your bank account. What is your authorized overdraft protection limit, fees associated with overdraft, whether you are automatically enrolled in courtesy overdraft protection or not etc.?
- Read bank’s terms and conditions regarding overdraft carefully.
- Track your spending and take receipts whenever you withdraw at ATMs.
- Consider using a low interest credit card if you’re in a bind. That may be cheaper – especially if you can pay it off before it accrues interest.
- According to the Consumer Financial Protection Bureau, you should either link your checking account with your savings account for overdraft protection or should get your withdraw requests declined rather than paying fees.
- Have your bank text you a notification when your account goes under a certain amount.
- Look for checking accounts with low ATM overdraft fees.
- Organize your receipts and payments in such a way that money goes out only after money comes in.
- Choose traditional overdraft protection over courtesy protection to give you more protection.
- If you have a payment due, try to convince the creditor to postpone the payment deadline rather than overdrawing your account.
- Have extra funds available in your checking account above your regular requirement.
- Build up a cash reserve in your account so you never have to worry about overdrafting on a day-to-day basis.
That’s how to overdraft at an ATM. Knowing how to overdraft at an ATM can be a practical thing to know. And now you know how to make sure it doesn’t negatively impact your life.