Common use of Overdrafts and Overdraft Transfer Clause in Contracts

Overdrafts and Overdraft Transfer. a. What is an Overdraft? An overdraft occurs when a check, electronic Automated Clearing House (ACH), ATM or debit card, or other payment or transaction you have made is presented to the Credit Union for settlement, but sufficient funds are not available in your checking account to pay the transaction. In such a case, the payment would normally be returned to the payee or denied for insufficient funds, and you may be charged a Rejected Item fee. With Overdraft Protection, however, the transaction can be paid using available funds from another deposit or loan account of yours or, if you have qualified, with our discretionary Overdraft Privilege Program. You may incur fees as set forth in our Fee Schedule for using the Overdraft Privilege Program, so you should always take care to avoid creating any overdraft. The following terms explain how our Overdraft Protection Program works.