What is the primary purpose of overdraft protection?

The primary purpose of overdraft protection is to allow spending beyond the account balance. This service is offered by financial institutions to prevent a transaction from being declined when there are insufficient funds in an account. Instead of bouncing a check or refusing a debit transaction, the bank covers the shortfall, enabling the account holder to complete the purchase or payment even if they exceed their current account balance.

This can be especially useful in emergencies or unplanned situations where access to funds is critical. However, it is important for account holders to be aware that utilizing overdraft protection can incur fees, and responsible management of finances is necessary to avoid accumulating debt through repeated overdrafts. This service does not inherently promote limitation of spending or encourage savings and it does not prevent all account withdrawals, as it specifically allows transactions even when funds are low.