If you are charged a penalty when your balance goes negative, what is the fee called?

• A. Credit Report
• B. Overdraft Fee
• C. Checking Account
• D. Balance

Answer: (B)

When you spend more money than you have in your checking account, the bank may step in and charge a fee for that negative balance. That charge is called an overdraft fee. It’s a fee tied to the account going below zero, and the exact amount can vary by bank and by how the overdraft is handled. To avoid overdraft fees, keep a cushion in your account, use balance alerts, or set up overdraft protection that links to another account or funds. Also remember that the other terms in the choices—like checking account, balance, and credit report—refer to different ideas: a checking account is the type of account you spend from, your balance is how much money you currently have, and a credit report is a record of borrowing and repayment.