Navy Federal lets you overdraft through overdraft protection, but you have to set it up first
Navy Federal does not automatically allow overdrafts on checking accounts. If you try to spend more than your balance, the transaction will be declined unless you have already enrolled in overdraft protection. This is a service that covers shortfalls, but it costs money and works differently depending on which protection option you choose.
You have three ways to overdraft at Navy Federal: link a savings account or money market account to cover the gap, use a Navy Federal credit card, or pay per-transaction overdraft fees. Each one has different costs and rules about how much you can borrow.
Key Takeaways
- Overdraft protection must be turned on before you can overdraft; Navy Federal will not cover overdrafts by default.
- Linking a savings account is usually the cheapest option because Navy Federal does not charge a fee to transfer money between your own accounts.
- If you overdraft without protection in place, the transaction will be declined and you will not incur an overdraft fee.
- Overdraft fees apply only if you have opted into overdraft protection and actually use it; Navy Federal charges per transaction, not per day.
- You can turn overdraft protection on or off anytime through online banking or by calling Navy Federal.
Linking a savings account to cover overdrafts
The most common way to overdraft is to connect a Navy Federal savings account, money market account, or share certificate to your checking account. If your checking balance drops below zero, Navy Federal automatically transfers money from the linked account to cover the shortfall. There is no fee for this transfer.
You can link any Navy Federal savings product you own. The transfer happens instantly when a transaction would overdraft your checking account. If your linked account does not have enough money to cover the overdraft, the checking transaction will be declined and you will not be charged a fee.
To set this up, log into Navy Federal online banking, go to your checking account settings, and look for overdraft protection options. You can choose which account to link and turn the protection on or off at any time.
Using a Navy Federal credit card for overdraft protection
You can also link a Navy Federal credit card to your checking account for overdraft protection. If your checking balance goes negative, Navy Federal will transfer money from your available credit to cover it. This counts as a cash advance on the credit card.
Cash advances on Navy Federal credit cards typically carry a higher interest rate than regular purchases, usually around 20% to 24% depending on your card and creditworthiness. You will also pay a cash advance fee, which is usually 3% of the amount transferred. These costs add up quickly if you overdraft regularly.
This option makes sense only if you need overdraft protection but do not have a linked savings account available. If you have savings, linking that account is cheaper.
Overdraft fees when you do not have linked protection
If you have not linked a savings account or credit card, Navy Federal will decline transactions that would overdraft your checking account. You will not be charged a fee for the declined transaction.
However, if you have overdraft protection turned on and use it, Navy Federal charges a per-transaction overdraft fee. The fee amount varies depending on your account type and membership status. Contact Navy Federal directly to confirm the current fee for your specific account, as rates change and may differ between membership tiers.
The overdraft fee applies once per transaction, not once per day. If you overdraft five times in one day, you pay five overdraft fees. This is different from some banks that charge one fee per day regardless of how many transactions overdraft.
How to turn overdraft protection on or off
You control whether overdraft protection is active on your account. Log into Navy Federal online banking, navigate to your checking account, and look for overdraft protection settings. You can enable or disable protection, change which account is linked, or switch between a savings account and credit card link.
If you turn off overdraft protection, transactions that would overdraft your account will simply be declined. You will not be charged a fee, and the merchant will not process the payment. This is the safest option if you want to avoid overdraft fees entirely.
You can also call Navy Federal's member services line to change your overdraft protection settings over the phone. Changes usually take effect immediately.
What happens if you overdraft without protection enabled
If you attempt a transaction that would overdraft your checking account and you have not set up overdraft protection, Navy Federal will decline the transaction. The merchant will not receive payment, and you will not be charged an overdraft fee.
A declined transaction may still appear on your account statement, but it will show as declined or rejected. Some merchants charge a fee for declined payments, but that is separate from Navy Federal's overdraft fee.
Repeated declined transactions can affect your relationship with a merchant or cause problems with automatic bill payments. If you rely on overdraft protection to cover regular shortfalls, linking a savings account is more reliable than hoping transactions will go through.
Overdraft protection does not affect your credit score
Using overdraft protection or paying an overdraft fee does not show up on your credit report. Navy Federal does not report overdraft activity to credit bureaus, so overdrafting will not lower your credit score.
However, if an overdraft causes you to miss a payment on a loan or credit card, that missed payment will be reported and will hurt your credit. Overdraft protection is meant to prevent that situation, not to replace making payments on time.
Frequently Asked Questions
Can I overdraft my Navy Federal checking account without setting it up first?
No. Navy Federal requires you to enroll in overdraft protection before you can overdraft. If you have not set it up and try to spend more than your balance, the transaction will be declined and you will not be charged a fee.
What is the overdraft fee at Navy Federal?
The fee amount depends on your account type and membership status. Contact Navy Federal directly to confirm the current fee, as it varies and may change. The fee applies per transaction, not per day.
Is it cheaper to link a savings account or use a credit card for overdraft protection?
Linking a savings account is almost always cheaper. Navy Federal charges no fee to transfer money between your own accounts. A credit card cash advance charges both a fee (usually 3%) and a higher interest rate (typically 20% to 24%).
Can I turn off overdraft protection if I change my mind?
Yes. You can turn overdraft protection on or off anytime through online banking or by calling Navy Federal. Once it is off, transactions that would overdraft your account will be declined instead.
Will overdrafting hurt my credit score?
No. Overdrafting or paying an overdraft fee does not appear on your credit report. However, if an overdraft causes you to miss a payment on a loan or credit card, that missed payment will be reported and will damage your credit.