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Posting Order & Overdraft Fees: What to Know

Whoever came up with the phrase “knowledge is power” was really onto something. At TD Bank, we want you to feel totally empowered when it comes to your money and be well-informed about everything involving your finances. Yep, even the things that may make you a little anxious. Like bank fees.

No one should be left in the dark about bank fees—after all, they’re the cost of providing services. So, let’s get into the basics about fees—particularly overdraft fees—why they happen and how to steer clear of them.

Understanding your bank's posting order
The one thing you really don’t want to happen is for you to deposit a check, assume the money’s available right away, and then use your debit card and get hit with an overdraft fee. Yikes. Understanding your bank’s posting order—the order in which they process deposits and withdrawals—can stop that from happening. All banks have different posting orders. So, be sure to speak to your bank representative to get more info about their specific posting order and avoid any confusion.

What about "processing" time?
How long does processing deposits take? What are the cut-off times for making deposits? And when’s your money available for withdrawal?

These answers are different for each bank, but for TD Bank, check deposits made before the cut-off time, typically 8 p.m. ET on business days (Monday–Friday, excluding holidays) are usually processed and available the next business day. Check deposits made after the cut-off time are usually available in two business days. Longer holds may apply. Cash and direct deposits are usually made available immediately. Learn more about funds availability and check holds. 

How an overdraft can happen
Overdrafts can happen if you take money from your account before your checks have cleared. It’s basically spending money you don’t have yet—but you may not even know you don’t have it because your money’s been put on temporary hold for processing. So, why are funds put on hold?

The main reason for temporarily holding funds is to minimize the possibility of returned payments from your account. A bounced check can lead to overdraft fees and other charges stemming from us having to cover those payments for you. The holding period gives us the time to:

  1. Verify the payer’s bank has sufficient funds to clear the deposit into your account.

  2. Notify you if a check bounces, so you don’t end up spending money you don’t have.

  3. Review the transaction to determine if it’s legit or potential fraud.

How to avoid certain fees
There are a couple ways to make sure certain banking fees don’t sneak up on you

  1. Use your bank’s ATMs to avoid an extra withdrawal fee.

  2. Cash out at point of sale—in other words, use your debit card to get cash back when making an in-store purchase.

  3. Consider a no- or low-fee account, though keep in mind it may not have as many perks either.

  4. Link your checking account to a savings account for overdraft protection.

And, of course, you can talk to your bank or visit their website to learn how to avoid overdraft fees. See what overdraft services they offer, too. From there, you can reassess your needs and find a solution that best fits your circumstances. After all, you want banking that works for you—not the other way around.

Account guides: more knowledge, more power
Whatever checking account you may have with us, we’ve got an account guide for it. If your financial situation has changed or your needs are different, these detailed guides are super handy resources for helping you figure out which account option is best for you. Each one not only includes overdraft info, but all the unique features and policies related to the account. Basically, everything you need to make the right choice.

Understanding overdrafts and how to avoid them takes a little homework. Finding the right bank, the right account and right-for-you policies and services is well worth the time. Because we agree: knowledge is power. And with that power comes peace of mind. We want you to rest easy.

Take your next step with us

This article is based on information available in November 2021. It is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.