NGPF Banking Practice Test

Which description matches overdraft protection?

An insurance policy for bank accounts A savings account with no minimum balance A loan banks offer to customers when they try to withdraw more funds than they have in their account, usually for a fee and with interest A refund of ATM fees

Correct Answer:

A loan banks offer to customers when they try to withdraw more funds than they have in their account, usually for a fee and with interest

Explanation:

Overdraft protection is a service banks offer to cover transactions when you spend more than your available balance. It acts like a short-term loan or line of credit that pays the overdraft, often for a fee and with interest. This helps keep payments from being declined and can apply to debit purchases or ATM withdrawals. The other options don’t fit: it isn’t an insurance policy for bank accounts, it isn’t simply a savings account feature, and it isn’t a refund of ATM fees.

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