What Loan Options are Available for Covering an Overdraft?

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When you’re juggling work, chores, and family life, it can be easy to accidentally overdraft on your account. Huntington is here to help you understand overdraft coverage options and provide tips on how you can manage the costs.

two hands pull a wad of cash out of a wallet

With a personal loan, you can borrow a small amount of cash for the purpose of covering a negative balance on your account. If you make a mistake and overdraft, it may seem difficult to make ends meet and pull together enough funds to cover the extra expense. Fees could build up the longer it takes you to pay off an overdraft, which may turn into a major strain on your budget. We’re here to offer information about several options for covering the unexpected expense of an overdraft.

The Difference Between a Short-Term Loan, an Overdraft Loan, and an Overdraft Line of Credit

To make the best decision for your financial situation, it’s important to consider the different options you may have in the event of an overdraft. A short-term loan, overdraft loan, and overdraft line of credit are three personal loan options that might be helpful for your circumstances. Every bank may offer different overdraft options, so make sure you investigate how your bank handles overdraft and the types of protection they may offer.

A short-term loan is when you borrow a lump sum of money that you’re required to pay back, usually with interest, in a short amount of time. You may need to start making repayments as soon as 30 days after taking out your loan. With a short-term loan option, you can typically qualify for anywhere from $100 to a few thousand dollars. This can be helpful to cover an overdraft and ensure you will have a small amount of money to help you cover an overdraft on your account. However, you might have to pay back a larger amount with a higher interest rate.

An overdraft loan allows quick access to a small amount of money to help you cover an overdraw on your account. The loan amount is typically anywhere from $75 to a thousand dollars with applicable interest rates and fees. You have a bit more flexibility in repaying an overdraft loan, as you can typically choose to separate payments into installments or pay off the amount in one lump sum of money.

An overdraft line of credit is a loan option that may help you avoid fees and extra charges if your checking account ends up in the red. If you get an approval, you will have access to a predetermined line of credit attached to your account to help you cover overdraft fees and possibly avoid other financial problems like bounced checks or missed automatic payments. Depending on your finances, your credit limit may not be enough to make this option a viable one to cover an overdraft and any applicable interest rates or fees.

Huntington continues to offer most standard personal lending options but when you have an established checking account and meet the requirements, you may also qualify for Standby Cash® to help cover an unexpected expense or overdraft.

Standby Cash® Access Extra Cash Instantly

We know expected and unexpected expenses can put you in a pinch. That’s why Huntington created Standby Cash, a line of credit available to Huntington checking customers. Eligibility is based primarily on your checking and deposit activity, not your credit score. Open it instantly online or in the Huntington Mobile app, and immediately access the cash you need.

Learn More

Standby Cash is a line of credit that could be available to you right now. Log into your Huntington account online or in the mobile app to see if you qualify. You could access between $100 and $500 in just a few clicks. Pay it back over three months with automatic payments and there’s no interest. Otherwise, a 1% monthly interest charge (12% APR) applies to outstanding balances.

To qualify for Standby Cash, you need $1,000 or more in monthly deposits to a Huntington personal checking account for three consecutive months, and an average daily balance of $200 or more in your checking account. Other eligibility requirements apply, including your recent overdraft and/or return historyΩΩ. Qualifying for Standby Cash is based primarily on your checking and deposit history, rather than your credit score. Once you open Standby Cash, you can instantly transfer cash to your checking account. And you're eligible to make transfers as long as you continue to meet the requirements. The account and your activity are reported to credit reporting agencies, so your use could positively or negatively affect your credit score.

While Standby Cash is not overdraft protection, Huntington customers can leverage it to clear up an overdraft. If you believe you are going to overdraw your account, you can use Standby Cash and make a transfer to prevent the overdraft from occurring. If you do not bring your account positive while 24-Hour Grace is in effect (before midnight central time the next business day), your Standby Cash line will be suspended from further use until your account is no longer negative.ΩΩ. So, make sure to keep an eye on your finances and avoid overdraft and return transactions.

Overdraft Protection

Many banks offer protection to possibly prevent an overdraft. If you have more than one account registered with your bank, you may be able to sign up for overdraft protection through a transfer. For example, you can opt in to have money automatically transferred from your savings account to cover an overdraft on your checking account. You could also link a credit line or a credit card to cover an overdraft. Fees may apply to these options, depending on your bank or account termsΩΩ.

You can typically help avoid an overdraft fee by keeping track of your account balance or signing up for overdraft protection, which automatically transfers money from your other accounts to cover overdrafts. Huntington customers can take advantage of 24-Hour Grace® and $50 Safety Zone℠ to help avoid overdraft fees and returned items.

At Huntington, we know surprise bills and unexpected events occur, which is why we offer 24-Hour Grace, along with $50 Safety Zone. These two account features can help you avoid overdraft fees and returned items. 24-Hour Grace gives you more time to make a deposit before midnight central time the next business day in order to have your transactions paid or avoid an overdraft fee. With $50 Safety Zone, if you accidentally overdraw your account by $50 or less, you won't be charged an overdraft fee.

How Overdraft Fees Work

Overdraft fees occur when a transaction causes your account balance to drop below zero and you no longer have enough funds to cover the transaction. Your bank or credit union will typically charge you a fee that is a fixed amount regardless of the transaction amount. For example, if a $60 purchase causes an overdraft on your account, your bank may charge a flat rate of $35 per overdraft. In this instance, you would then owe the bank $95 to cover the overdraft and the fee.

Fees for an overdraft can be expensive, especially if you’re working paycheck to paycheck or dealing with a tight budget. For specifics on how Huntington handles overdraft fees, check out our Overdraft Fees Explained page.

How to Apply for a Personal Loan to Cover an Overdraft

If you find that you need a loan to make ends meet after an overdraft, you can usually apply for a personal loan with your bank or another financial institution. Lenders may require information about your credit history and credit score in addition to a relationship history with the bank or financial institution. Once you have an approval, a personal loan can help put money in your account so you can pay off an overdraft and any applicable fees. An overdraft loan can help you put money in your account after an overdraft and possibly avoid incurring more penalties by preventing your account from staying negative over a longer time period. After you cover the overdraft and settle your account, it’s time to set up a repayment plan on the loan.

How to Repay a Personal Loan

When repaying a personal loan, you may have the option to set up weekly or monthly payments, or you can pay off the amount in a lump sum of money. Banks and financial institutions have different repayment options and requirements depending on your loan amount, interest rates, and other factors. Check with your lender upon applying for a personal loan about finance charges, repayment loan options and expectations.

Advantages and Disadvantages of Bank and Personal Loans

Bank loans are a way for you to quickly access money to cover an unexpected financial emergency or accidental overdraft. They can help you cover costs in a timely manner and help ensure your account has enough funds to avoid fees. However, bank loans can come with their own fees, interest rates, and conditions. Paying back a loan could mean added strain on your weekly or monthly budget, which may necessitate cutbacks or adjustments in your financial planning. If you are unable to pay back your loan on time, it can have a negative affect on your credit and may inhibit your ability to get approval for overdraft coverage or loans in the future.

Does Having an Overdraft Affect Getting a Loan?

Mistakes happen. If you accidentally overdraft on your account once or twice, the consequences might not be too severe if you have protection plans in place and pay the overdrawn balance swiftly. Having multiple overdrafts on your account or having your account charge off could negatively impact your consumer reports making it more difficult for you to open new bank accounts or borrow money in the future. If you take out a personal loan or line of credit, borrowing that money comes with a risk to your credit score if you make payments late or miss them entirely. A lower credit score because of an unpaid loan could greatly affect your approval for larger loans in the future for purchases like houses or cars.

If you make consistent, timely payments on what you owe, your ability to get an approval for loans in the future will likely not be impacted.

Related Content

Standby Cash® and 24-Hour Grace® are federally registered service marks of Huntington Bancshares Incorporated. $50 Safety Zone℠ is a service mark of Huntington Bancshares Incorporated. Standby Cash is patent pending. The 24-Hour Grace® system and method is patented. U.S. Pat No. 8,364,581, 8,781,955, 10,475,118, and others pending.

§Transfers from lines of credit may be subject to applicable finance charges.

Your account will be automatically closed if it remains negative in any amount for 60 days, including if your account is overdrawn within our $50 Safety Zone. Learn more at huntington.com/SafetyZone and huntington.com/Grace.

The information provided in this document is intended solely for general informational purposes and is provided with the understanding that neither Huntington, its affiliates nor any other party is engaging in rendering financial, legal, technical or other professional advice or services, or endorsing any third-party product or service. Any use of this information should be done only in consultation with a qualified and licensed professional who can take into account all relevant factors and desired outcomes in the context of the facts surrounding your particular circumstances. The information in this document was developed with reasonable care and attention. However, it is possible that some of the information is incomplete, incorrect, or inapplicable to particular circumstances or conditions. NEITHER HUNTINGTON NOR ITS AFFILIATES SHALL HAVE LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.

Third-party product, service and business names are trademarks/service marks of their respective owners.

  Standby Cash is subject to terms and conditions and other account agreements. A 1% monthly interest charge (12% Annual Percentage Rate) will be added to outstanding balances if automatic payments are not scheduled. Available through online banking or the Huntington Mobile app to individuals with an active consumer checking account with at least three months of consistent deposit activity of $1,000 or more, and an average daily balance over the last 30 days of $200 or more. An active or recent bankruptcy or other legal process may disqualify you. Other eligibility requirements apply, including your recent overdraft and/or return history, regardless of whether you are charged overdraft fees or have transactions returned or they are waived with our 24-Hour Grace® and $50 Safety ZoneSM services. We reserve the right to change eligibility criteria at any time. Line amount and/or ongoing availability may vary based on changes to your deposit activity, average daily balance, and number and length of overdrafts and/or returns on any of your Huntington deposit accounts. When any of your Huntington deposit accounts are in an overdraft status for more than one day, your Standby Cash line may be suspended until they are no longer negative. If 90% or more of the approved credit line is drawn three months in a row, Standby Cash will be suspended until it’s paid to a zero balance. Business checking accounts are not eligible for Standby Cash.