Many people wonder how to overdraft at an ATM — whether it’s how to overdraft with a debit card or how to overdraft with a credit card.
To overdraft means to take more money out of your bank account than it has in it. Or, for credit cards, it means to exceed your credit limit. Most US banks and credit card companies allow an overdraft, provided you have authorized them to do so. Although banks charge overdraft fees for this service, many people authorize this banking feature because it allows them to continue to conduct financial transactions even when they have exceeded their bank account balance or credit limit.
How to Overdraft at an ATM
“Can I overdraft at an ATM?” Yes, you can overdraft at an ATM, simply by overdrawing your balance. To avoid doing so, though, consider getting overdraft protection, a banking service offered by nearly every financial institution that allows you to link all your bank accounts (e.g., your checking account and savings account). When one account balance is overdrawn, the overdraft protection kicks in, transferring money from another account balance to cover the shortfall. Although banks do charge overdraft protection fees, they tend to be far less than typical overdraft fees. Overdraft protection covers overdrafts caused by ATM withdrawals, checks, and purchases.
How Much Money Can I Overdraw at an ATM?
There’s no general answer regarding how much you can overdraw at an ATM. A bank’s overdraft limit depends on a variety of factors and often varies from one customer to the next.
New account holders and account holders with low credit scores are usually granted a courtesy overdraft limit between $100 and $300, while customers in excellent standing can often overdraft $1,000 or more. While it’s worth asking, many financial institutions will never officially let you know your overdraft limit.
Average Unauthorized Overdraft Fees
It’s important to know about your bank’s overdraft fees before you make the choice to overdraw your account because they can be astronomically high, in many cases. Many banks have been criticized for imposing “record high” ATM overdraft fees, topping $30 per transaction in some cases. Further, your fees may increase at a progressive rate for each transaction. For more details about overdraft fees, read this in-depth article regarding overdraft fees.
In short, overdrafts are costly. It’s best to either get overdraft protection or avoid overdrafts altogether. If you want to know more about how much you can withdraw from an ATM (many banks are listed with their limits), 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. Your bank will set the limit on how much (if anything) you can overdraw your account.
What does “overdrawn” mean on a debit card? If you see this term on your bank statement, it means you must fund your account to eliminate the possibility of more fees or being turned into collections. Contact your financial institution to remedy the situation.
Can You Use a Credit Card at an ATM, and Can You Overdraft a Credit Card at an ATM?
Yes and yes. But be aware — withdrawing cash on a credit card is expensive. There are nearly always fees associated with cash withdrawals, unless you have a special offer or special rate with your card. The interest rates charged on cash withdrawals generally surpass rates associated with standard purchases. While average credit card rates are around 20%, cash withdrawal rates are about 25%.
Technically, there are no overdraft fees with a credit card; however, it is possible to overdraw a credit card at an ATM, provided your credit card company allows you to exceed your credit limit. You may need to contact your credit card company and request pre-authorization to overdraw your card. If you want to know more about getting cash from your credit card, we highly recommend reading this article about how to get cash from your credit card.
Does an ATM Overdraft Affect Your Credit Score?
Not usually. For a debit card, an overdraft will have no affect on your credit score unless, as explained in detail in this article, you don’t repay for months and your account is sent to collections (generally after 30 days).
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 view it as a red flag because they assume you had to withdraw cash from your credit card because of financial problems. Because of this, you should use overdraw with a credit card only as a last resort. If you need cash from your credit card, here are six ways to do it responsibly.
Can You Overdraft at Every ATM, and Will It Warn You?
An ATM owned by your bank (or one affiliated with your bank) will let you overdraft, provided your account has the option to overdraft. Among other banks, your ability to overdraw your account will depend on their terms and conditions. Among those institutions that allow non-customers to overdraft at their ATMs, the amount is usually limited.
Some banks are quite courteous when it comes to overdrafts. For example, 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. Most banks will allow you to check your balance and avoid unwittingly overdrawing your account.
Things to Know if You Plan to Overdraft at an ATM
- Use an ATM owned by your bank (where possible) to avoid being denied an overdraft at another financial institution.
- An overdraft on a debit card doesn’t affect your credit score, provided you pay it back in full before your account is sent to collections (usually 30 days).
- Credit cards don’t issue overdraft fees. Instead, they will likely charge a higher interest rate for a cash withdrawal. Call your credit card company to receive pre-authorization to withdraw an amount that exceeds your credit limit
How to Avoid Overdrafting at an ATM
- Know your account details. What is your authorized overdraft protection limit? What are the fees associated with overdraft? Can you enroll in courtesy overdraft protection?
- Carefully read your bank’s terms and conditions regarding overdraft.
- Track your spending and take receipts whenever you withdraw at ATMs.
- Consider using a low-interest credit card if you’re in a bind. It may be a more cost-effective alternative to overdrawing your account, especially if you can pay it off before it begins to accrue interest.
- According to the Consumer Financial Protection Bureau, you should either link your checking account with your savings account for overdraft protection or ask your bank to deny overdrafts on your account.
- Ask your bank if you can receive text or email notifications when your account falls below a certain amount.
- Look for checking accounts with low overdraft fees.
- Strategically organize your monthly payments to avoid overdrawing your account.
- If you have a payment due, ask the creditor to postpone the payment deadline to avoid overdrawing your account.
- Build a cash reserve so you always have extra funds available in your checking account for emergencies.
There are several ways to take advantage of ATM overdrafts or avoid them, depending on your financial needs. Understanding your options when it comes to overdrafts will allow you to make sure they don’t negatively impact your life.