An overdraft limit is the maximum amount of money that a bank account holder is allowed to withdraw or spend beyond their available balance. When a person exceeds their overdraft limit, they may be charged fees or penalties by their bank.
Each bank sets its own overdraft limit policies, which may vary based on the account holder's creditworthiness and banking history. Some banks may also offer overdraft protection services, which automatically transfer funds from another account to cover overdrafts.
It is important for account holders to be aware of their bank's overdraft limit and to manage their finances responsibly to avoid incurring unnecessary fees. Keeping track of spending, setting up alerts for low balances, and maintaining a buffer in their account can help account holders stay within their overdraft limit.
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