Which term describes a loan or credit used to cover withdrawals when funds are insufficient?

Which term describes a loan or credit used to cover withdrawals when funds are insufficient?

• A. Online Savings Account
• B. Overdraft Protection
• C. Simple Interest
• D. Reconcile

Answer: (B)

Overdraft protection is the service that acts as a safety net when spending exceeds what’s available in the account. Banks can link a savings account, a credit line, or another funding source to cover withdrawals or debit transactions that would otherwise overdraw the account. It allows the balance to go negative up to an approved limit, usually with a fee or interest charged on the borrowed amount. This helps avoid bounced checks or declined purchases, while the user repays the borrowed funds later. The other terms don’t describe this borrowing feature: an online savings account is simply a savings vehicle, not a loan; simple interest refers to how interest is calculated, not a borrowing protection; and reconcile is the process of matching records to ensure balances are correct, not a way to cover insufficient funds.

Overdraft protection is the service that acts as a safety net when spending exceeds what’s available in the account. Banks can link a savings account, a credit line, or another funding source to cover withdrawals or debit transactions that would otherwise overdraw the account. It allows the balance to go negative up to an approved limit, usually with a fee or interest charged on the borrowed amount. This helps avoid bounced checks or declined purchases, while the user repays the borrowed funds later.

The other terms don’t describe this borrowing feature: an online savings account is simply a savings vehicle, not a loan; simple interest refers to how interest is calculated, not a borrowing protection; and reconcile is the process of matching records to ensure balances are correct, not a way to cover insufficient funds.