Can you transfer the overdraft to a credit card?
To cover the credit overdraft, the client can transfer money from the credit card to his checking account (provided that the card is issued by the bank used by the client). In addition, the client can receive a cash loan from his credit card, and then deposit this money into his (her) personal account. There are ways to cover an overdraft that will not require the client to pay as much as if the overdraft is covered with a credit card. If you want to learn more information about credit cards and overdrafts, you can read about them in this article.
Can a bank customer transfer an Overdraft to a Credit Card?
If the client wants to avoid overdraft fees, but he (she) doesn't have the cash to close the overdraft immediately, the client can use the card of the bank that he (she) uses or take a loan from a credit card and deposit it into his (her) checking account. All this can be done to cover the negative balance.
How to protect yourself from overdraft?
Many banks, as a form of protection against overdrafts, offer customers to link their credit cards to bank accounts and transfer information between them (within the same bank). A Client can connect his (her) card to a bank account online.
After the client has linked his accounts, he can use the so-called personal loan to cover the negative balance within the credit limit available to him. Loan offers much higher interest rates and fees than normal credit card use.
In addition to the high interest rates and fees faced by a customer, bank, or credit union (such as Wells Fargo, which charges additional fees to protect from overdraft). The bank should indicate these additional fees in the deposit agreement in accordance with the CPB's FAQ about bank accounts and services.
We conducted a survey of representatives of several large banks in the United States (such as Bank of America, Citibank, KeyBank, PNC, Wells Fargo) and confirmed that banks and credit unions allow the type of transfer described above only for cards issued by this particular credit organization and only for their own accounts (credit cards issued by other banks cannot be connected to an account with another bank).
Credit Card cash advance
In case the client is unable to link his credit card to a bank account in order to pay the overdraft, the client can receive a cash advance (the loan fee will be a percentage of the advance amount or a flat rate). It is likely that a customer using upfront cash will incur a higher interest rate than regular using a credit card.
The issuing bank can provide the client with an advance from the credit card (or the client can contact a financial institution or any ATM (Asynchronous Transfer Mode) if he (she) has a PIN code). If the client does not have a PIN to receive an advance payment, he can call the bank and receive his (her) PIN code.
If the client wants to quickly and easily use the cash advance to cover the overdraft, he should withdraw this money from an ATM (owned by the bank he uses) and then deposit the money into the account. Many US banks and unions do not charge overdraft fees if the negative balance is covered by the next business day - this situation can be especially beneficial for the client.
Does the bank customer have to cover the overdraft with a credit card?
If the client can pay off the credit card balance on time, the best solution for him would be to pay the overdraft from the credit card. Overdraft fees can be higher (typically $ 30-40 per overdraft transaction) than cash loan and cash transfer fees. (If you would like to learn more about overdraft at each US bank, we recommend that you read our research).
Loans are charged a higher interest rate (than for regular purchases) and interest on cash loans begins to accrue immediately (rather than at the start of a monthly billing cycle), so using an overdraft to cover a card balance can be much more expensive for the customer.
How else can a client protect himself from overdraft?
If the customer is unwilling to use a credit card to repay the overdraft, most US banks are willing to allow the customer to use a different type of account. Linking a second checking account, savings account, or line of credit are standard overdraft protection options. In this case, the client will still be charged a commission for the transfer, but the client will be able to avoid charging interest and commission for the payment on the credit card. Credit card interest and overdraft fees have a much higher rate than the interest on a line of credit.
As an option to protect against overdraft fees, the client can use a credit card to transfer funds to their current bank account, or the client can use a credit card to receive an advance, which can then cover the negative balance, but the client will incur a transfer fee, an advance fee, and high-interest rates. Other options for protecting against overdraft include linking another checking account, savings account, or credit line.
Please see our list of different credit cards. Here you can also find out how to increase your credit card limit without problems.