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Savings Transfers to Checking for Overdraft Protection

Can my savings account be used to cover overdrafts in my checking account?


Many financial institutions will set up an account that will do this for you, but savings account have limits on the number of transfers allowed and that could prevent a regular savings account from being of much use. There is an exception for special savings accounts that are actually categorized by the bank as a Negotiable Order of Withdrawal (NOW) accounts or Automatic Transfer Service (ATS) accounts. These two categories may have unlimited transfers to your checking account, but they have ownership restrictions. Consumers may have these, but for profit businesses may not.

There may be a additional fee for the account or for each transfer. These conditions are based on the your bank's policy. You should ask about fees, the frequency of transfers and if there is a minimum amount that will be transferred. Some banks will transfer amounts in given increments only, such as $100, $200, $300, etc.

Published on BankingQuestions.com 7/28/06