You are at the grocery checkout. Bags are packed, your kid is asking about snacks, and your card says “declined.” Most of the time it is not a bad decision. It is timing. A bill posted before payday. An autopay you forgot. A few small swipes that added up. Overdrafts happen to people at every income level. The fix is not shame. It is a setup that keeps life moving with fewer surprises.
At First Alliance Credit Union, we treat overdrafts as a cash-flow moment. Here is what an overdraft is, what it can cost, and how our tools make tight weeks calmer.
An overdraft happens when a transaction tries to clear and your available balance is not enough to cover it. After that, one of three things can occur. The transaction is paid and your account goes temporarily negative. It is covered by money moved from another place you have linked. Or it is returned and does not go through. Your settings decide which path you take and how much stress you feel when bills and paydays do not line up.
There are two fees you may see in these moments. If an eligible transaction is paid even though it dips your balance below zero, you may see an overdraft coverage fee. If a transaction is returned unpaid, you may see a returned or NSF fee. Some companies also charge their own fee when a payment bounces. Exact amounts can change, so check First Alliance’s current fee schedule before you choose the setup that fits you best.
A familiar week, solved three ways
Now that you know the options, picture this: it’s Thursday and payday is Friday. Your utility payment posts. If Courtesy Pay is on, we cover it and your balance goes negative until Friday. If you’ve linked savings or set up an overdraft line of credit, funds move over and the payment clears. If you’ve opted out of coverage, the payment is returned and you handle it with the utility. None of these choices make you a bad budgeter; they are guardrails. We’ll help you pick the one that fits this season of your life.
Courtesy Pay is an optional cushion that can cover eligible transactions when your balance comes up short. It helps avoid declined cards at the register or returned checks on important bills. There is no credit pull to opt in, and you can opt in or out at any time. A fee applies each time Courtesy Pay is used, so it is best as a backup, not a daily habit.
Linked savings transfers move available funds from savings to checking to cover small gaps. Your savings will not go negative. That means you stay protected, and you can refill savings when the pressure passes. A transfer fee may apply.
Overdraft Line of Credit (ODLOC) is a small line tied to your checking. If you use it, you pay interest only on the amount you used. Many members like this because it is predictable, and they can pay it down on payday. You can apply online or at a branch.
Good to know. Overdraft events themselves do not appear on your credit report. Late payments on an ODLOC could. If you choose that route, we will help you set a payment plan that fits your budget.
Open the mobile app and use Instant Balance to see where you stand. Move money from savings if you can. If you have a paper paycheck, make a mobile deposit so the funds start working for you. Check pending transactions so there are no surprises. If cash is tight until your deposit lands, ask about an ODLOC to bridge the timing gap.
Simple habits that prevent most overdrafts
The easiest win is a low-balance alert. Pick a number that gives you breathing room, maybe $25 or $50, and get a text or email before a transaction would push you negative. Build a quick “peek before you pay” routine with Instant Balance, especially for everyday swipes. Budget by paycheck, not by month. Assign some bills to the first check of the month and the rest to the second, so due dates stop colliding. If small purchases are your weak spot, set a weekly fun-money amount. When it is gone, you are done for the week. No guilt required.
Kim teaches the step‑by‑step moves to recover fast if you do go negative, and budgeting hacks to stop the cycle for good!
If overdraft fees keep showing up, you are not alone. The way out starts with a paycheck calendar. We will map your deposit dates, due dates, and typical spending so you can see where the pressure builds. Sometimes it helps to replace scattered fees with one small, fixed payment for a short time, then layer in alerts and a modest buffer. The goal is calm, not perfection.
Can you turn Courtesy Pay on later?
Yes. You can also turn it off if you prefer a decline instead of a fee.
Can savings go below zero?
No. If there is not enough in savings to cover a transfer, it will not pull the account negative.
Which option costs less?
It depends on how often and how far you dip. We will compare Courtesy Pay, linked transfers, and an ODLOC based on your habits and help you choose.
Overdrafts are timing problems, not failures. With the right setup and two or three simple habits, you can keep bills paid, avoid most fees, and breathe easier. If you want help choosing between Courtesy Pay, linked transfers, or an overdraft line of credit, we’ll walk you through it and set up alerts so money stress stays low.
We’ll help you:
Open a checking account that fits your budget
Turn on low-balance alerts and Instant Balance
Explore an overdraft line of credit, if it makes sense
Build a simple paycheck calendar and download our budget worksheet