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Let's talk about how overdrafts work and how to overcome them. An overdraft happens when you spend more than the available balance in your checking account, and it's more common than you might think. If you've dealt with overdrafts in the past, it's okay. You're not alone, and you have the power to take more control of your money.

Here's how overdrafts work. When you spend more than your available balance, the overdrawn amount may be covered to keep the transaction from being declined or returned. There are a few ways this can happen. If you have money in your savings account, your bank can automatically transfer those funds to cover the transaction. You can talk to your bank about linking your accounts. Some banks also offer an overdraft line of credit, which you may be able to borrow from, but later you'll have to pay the overdrawn amount plus interest. Now, if those first two options aren't available, your bank may cover the transaction, but you'll still have to pay back the overdrawn amount plus a possible fee.

But the good news is that you can take steps to help avoid fees, even if you've been in a cycle of repeat overdrafts. Here are five tips that can help you overcome overdrafts. First, remember that everyone makes money mistakes. When you hit a speed bump, be kind to yourself and keep taking small steps forward. Second, control what you can. Making small changes, like automatically saving a portion of every paycheck, or if shopping around for discounts on things like your car insurance or cellphone plan can be big for your budget and happiness. Other ways to take control include aligning your bill due dates with your paydays to make managing your cash flow easier, or setting up low balance alerts to help you keep tabs on your spending.

Third, limit impulse buys. Whether you're browsing the internet or winding your way through the checkout line, stick to a predefined spending limit. Fourth, start thinking long term, viewing your financial journey as a marathon and not a sprint can help you stick with small changes, plan for bigger-picture goals and find more happiness over time. And last but not least, be sure to celebrate your wins. Keeping track of every goal you accomplish, no matter how small, can help you stay motivated. You've got this. For more tips and inspiration, visit

What happens when I overdraw my account?

Budgeting by values

Spending more than you have may make your finances more stressful than they need to be. Understanding how overdrafts work can help you avoid it.

Overdrawing your account isn’t the worst thing that could happen.  It happens more often than you might think. In fact, data shows that 50% of Americans have overdrawn their account at least once.Disclosure 1

So what’s the big deal? Occasionally overdrawing your account may not seem major, but frequently going in the red could still take a toll on your financial life—and that can have a direct impact on your mental health and well-being.

This video takes a closer look at overdrafts and helps answer some common questions. By understanding how they work, you can avoid financial missteps—and empower yourself to build better money habits and stress less.

For more help getting on the path toward better financial confidence and well-being, check out this collection of stories.

This content does not constitute legal, tax, accounting, financial, investment, or mental health advice. You are encouraged to consult with competent legal, tax, accounting, financial, investment, or mental health professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.