What does an overdraft privilege allow you to do?

An overdraft privilege allows you to make payments that exceed your account balance. This service provided by banks permits you to complete transactions even when you don't have enough funds in your checking account, thereby helping you avoid bounced checks and declined purchases. For instance, if you have a balance of $50 but try to make a purchase of $75, the overdraft privilege permits that transaction to go through, allowing you to access additional funds (up to a specified limit) temporarily.

This feature is particularly useful in managing cash flow since it can prevent you from facing insufficient fund fees or missing important payments. However, it is important to keep in mind that while this service provides convenience, there may still be associated fees or interest charges applied depending on the bank's policies.