advice

Overdraft Protection

Overdraft Protection has you covered when your account is running low.

What is Overdraft Protection?

Overdraft Protection is a small line of credit attached to a personal chequing account, which allows a negative balance, or “authorized overdraft,” within an approved limit. It is a short-term solution to manage your money and make sure your payments go through when you’re short on cash, all while saving you money on unauthorized overdraft fees.

How does it work?

In the event that a transaction causes your account to go into a negative balance, the transaction will be honoured up to the approved Overdraft limit. Interest is payable only when using the Overdraft limit, and is calculated on your daily balance and charged once per month at month-end. There are no additional fees to worry about.

At Libro, we have Overdraft limits available from $300 to $5,000.

By using overdraft protection you can avoid fees for non-sufficient funds, unauthorized overdraft, or any charges that a vendor might charge for return of payment or a late payment. The fees for unauthorized overdraft or vendor charges vary depending on the institution.

View our Overdraft Protection Agreement. 

What do I need to get started?

You will need the following documents to apply for Overdraft Protection:

  • Government Issued ID (Driver’s License, Passport, Ontario Photo Card, etc.)
  • Proof of Employment and/or a recent paystub

Talk with a Libro Coach

Have peace of mind that your payments are covered

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Example Overdraft Protection Scenarios

“Jenny usually gets paid on Thursdays by cheque and she knows that her mortgage payment comes out of her chequing account by direct debit on Fridays. When Jenny is unable to deposit her cheque Thursday afternoon, she realizes her account does not have the funds to cover her mortgage payment. Luckily, she has Overdraft Protection on her chequing account, so when her mortgage payment comes out of her account Friday morning, her chequing account shows that she is in the negative but not in unauthorized overdraft. When she deposits her cheque on Friday, her account is once again brought into the positive and she does not owe unauthorized overdraft fees from her banking institution, but a small amount of interest for the time that she was in the negative.”

“Robert’s chequing account is running low these days. He has all of his utility bills set up for pre-authorized debits, so they come out of his chequing at the same time every month. Robert lost track of time and received a notification that his chequing account went into unauthorized overdraft due to his hydro bill coming out. As he doesn’t have Overdraft Protection, and he cannot transfer funds into his account immediately, the payment must be sent back by his financial institution. This results in a fee of $50, and a fee from the hydro company for being late on his payment. This also reflects poorly on his credit report.”

Manage your money with Libro

Libro Coaches are here to support you in making informed financial decisions for your unique situation.

  • Personal loans
  • Lines of credits
  • Mortgages

Get in touch with a Libro Coach today