What Is an Overdraft and How to Use It With Chime
An overdraft is a service offered by financial institutions that allows customers to spend more money than they have in their accounts. This is achieved by the bank covering the remaining balance, allowing customers to avoid the embarrassment of being declined for a purchase. An overdraft is offered by most banks, including Chime, which offers a feature called SpotMe.
SpotMe is a service offered by Chime that allows customers to overdraft up to $100 without a fee. This is in addition to the standard overdraft feature that allows customers to overdraft up to $20, with a fee of $34.00 per transaction.
In this guide, we will cover what an overdraft is, how to use it with Chime, and the risks associated with overdrafting.
What Is an Overdraft?
An overdraft is a service offered by most banks that allows customers to spend more money than they actually have in their accounts. This is achieved by the bank covering the remaining balance, allowing customers to avoid the embarrassment of being declined for a purchase.
When a customer overdraws their account, they will be charged an overdraft fee. The fees vary from bank to bank, but are typically around $34.00 per transaction. Its important to note that if customers continue to overdraw their accounts, they can be charged multiple fees in a single day.
How to Use an Overdraft With Chime
Chime offers two different overdraft options for its customers. The first is the standard overdraft which allows customers to overdraft up to $20 with a fee of $34.00 per transaction. The second is SpotMe, which is an optional overdraft feature that allows customers to overdraft up to $100 without a fee.
To use the standard overdraft feature, customers must opt-in to the service. This can be done by logging into the Chime app and navigating to Settings, then Overdraft. Once opted-in, customers can overdraft up to $20 per transaction.
To use SpotMe, customers must first be eligible. Eligibility is determined by a customers account history and is subject to change. If eligible, customers will be able to overdraft up to $100 without a fee.
Risks of Overdrafting
Overdrafting can be a useful service, but it also comes with risks. The most obvious risk is that customers can be charged an overdraft fee if they overdraw their accounts. In addition to this, customers can also be charged multiple fees in a single day if they continue to overdraw their accounts.
Another risk associated with overdrafting is that customers can find themselves in a cycle of debt if they are not careful. This can be especially true for customers who are using SpotMe and are unaware of the fees associated with the standard overdraft feature.
Conclusion
An overdraft is a service offered by most banks that allows customers to spend more money than they actually have in their accounts. Chime offers two different overdraft services: a standard overdraft and SpotMe. The standard overdraft allows customers to overdraft up to $20 with a fee of $34.00 per transaction, while SpotMe allows customers to overdraft up to $100 without a fee.
Its important to be aware of the risks associated with overdrafting, such as fees and the potential of falling into a cycle of debt. If used responsibly, however, overdrafting can be a useful service that can help customers avoid embarrassing situations