Is Ability to Overspend a Good Reason to Choose a Bank Account?

Looking for some extra cash? Certain apps can assist, but they require access to your bank account as well.

Banking fintech companies like Dave and MoneyLion offer small, short-term cash advances to eligible users. By opening a bank account or setting up direct deposit, these apps provide lower fees or higher borrowing amounts. Other apps, such as Chime, Current, and Albert, offer a no-fee overdraft service for account holders, covering expenses in case of insufficient funds.

However, relying solely on the availability of extra cash between paychecks may not be a sufficient reason to commit to a new bank account, according to Adam Rust, a director of financial services at the Consumer Federation of America. With over 8,000 federally insured banking institutions to choose from, consumers should consider various factors when selecting a new bank, beyond just the option for overspending.

When in urgent need of additional funds, setting up a bank account, possibly with direct deposit, might seem like a small obstacle to overcome if it means getting the required cash right away. Apps like Dave and MoneyLion charge a fee for immediate funding, while Chime, Current, and Albert offer fee-free overdraft coverage under certain conditions.

While apps offering cash advances or overdraft services may seem beneficial for short-term financial assistance, opening a new bank account solely for these features may lead to unexpected challenges. Switching banks is a significant decision that can impact various aspects of your financial life, including bill payments and subscriptions.

To determine the best banking option, assess available features and associated costs, such as monthly fees, minimum balance requirements, ATM access, and money transfer options. Neobanks like Dave, MoneyLion, Chime, Current, and Albert offer cost-effective checking account options with certain perks not often found in traditional banks. However, it’s essential to consider features these firms lack, like joint accounts, business banking capabilities, and access to branch networks for in-person services.

Additionally, keep in mind that most banking fintech firms have accounts insured through partner banks, raising the risk of delays or obstacles in accessing funds if the firm fails. Credit-related benefits also have certain limitations, such as borrowing caps and maximum coverage amounts for overdraft features.

Instead of solely relying on cash advances and overdraft coverage, explore alternative options that entail lower commitments to apps and minimal fees. National banks, federal credit unions, local nonprofits, or family loans can provide assistance with everyday expenses in a more sustainable manner.

Looking for a quick cash fix? Some apps can provide that, but at a cost – your commitment to becoming their bank customer. Apps like Dave and MoneyLion offer cash advances for a temporary financial boost, but sweeten the deal with lower fees or higher borrowing limits if you open a bank account or set up direct deposit. On the other hand, banking apps like Chime, Current, and Albert provide fee-free overdraft coverage for account holders to cover expenses in case of insufficient funds.

However, according to Adam Rust from the Consumer Federation of America, solely relying on a new bank account for a small cash advance might not be a wise financial decision. With over 8,000 federally insured banking institutions to choose from, it’s essential to consider a bank that aligns with your financial needs beyond just temporary cash flow solutions.

So, how should you approach the decision of obtaining extra cash and selecting a bank account? It’s crucial to weigh the benefits and drawbacks of each, understanding that convenience and potential risks are factors that shouldn’t be overlooked in pursuit of immediate financial assistance.

In today’s fast-paced consumer culture, overspending is a common issue that many people struggle with. With easy access to credit cards, online shopping, and contactless payment methods, it can be all too tempting to spend beyond our means. As a result, some individuals may be drawn to bank accounts that offer the ability to overspend as a key feature. But is this really a good reason to choose a bank account? In this article, we will explore the pros and cons of having the ability to overspend and whether it should be a deciding factor when selecting a bank account.

Understanding the Ability to Overspend

Firstly, let’s clarify what we mean by the ability to overspend. Some banking institutions provide their customers with overdraft facilities, which allow them to spend more than the amount they have in their account. This overdraft amount is essentially a short-term loan from the bank, and customers are usually charged interest or fees for using this facility.

Pros of Having the Ability to Overspend

1. Financial Flexibility: One of the main advantages of having an overdraft facility is the flexibility it provides in managing your finances. It can act as a safety net for unexpected expenses or emergencies, allowing you to make essential payments even when your account balance is low.

2. Avoiding Unauthorised Overdraft Fees: By having an authorised overdraft facility in place, you can avoid the potentially higher fees associated with unauthorised overdrafts. Unauthorised overdrafts occur when you spend more than your account balance without prior approval from the bank, leading to penalty charges and negative consequences for your credit score.

3. Building Credit History: Using an overdraft responsibly and repaying the borrowed amount on time can help you build a positive credit history. This can be beneficial when applying for loans, mortgages, or other financial products in the future.

Cons of Having the Ability to Overspend

1. Temptation to Overspend: While an overdraft facility can provide financial flexibility, it can also tempt you to overspend and rely on borrowed money to cover your expenses. This can lead to a cycle of debt and financial instability if not managed carefully.

2. Interest and Fees: Banks typically charge interest or fees for using an overdraft facility, which can add up over time and make overspending even more costly. It’s essential to understand the terms and conditions of your overdraft agreement to avoid getting into debt.

3. Impact on Credit Score: Misusing an overdraft facility or failing to repay the borrowed amount can have a negative impact on your credit score. This can make it harder for you to access credit in the future and may result in higher interest rates on loans and credit cards.

Is Ability to Overspend a Good Reason to Choose a Bank Account?

Ultimately, the ability to overspend should not be the primary reason for choosing a bank account. While having an overdraft facility can provide financial flexibility and convenience, it’s essential to consider your spending habits, financial discipline, and long-term financial goals before opting for this feature.

When selecting a bank account, focus on other factors such as interest rates, fees, customer service, online banking options, and additional perks or benefits offered by the bank. Consider your individual financial needs and choose an account that aligns with your priorities and values.

If overspending is a concern for you, explore alternative strategies to manage your finances effectively, such as creating a budget, setting spending limits, tracking your expenses, and seeking advice from a financial advisor. Building healthy financial habits and being mindful of your spending can help you avoid falling into debt and achieve your financial goals in the long run.


In conclusion, while the ability to overspend may offer convenience and flexibility in the short term, it’s essential to weigh the pros and cons carefully before making it a deciding factor when choosing a bank account. Responsible financial management, budgeting, and planning are key to maintaining a healthy financial outlook and avoiding debt. By prioritising financial discipline and making informed decisions, you can effectively manage your finances and achieve long-term financial stability. Choose a bank account that meets your needs and aligns with your financial goals to set yourself up for success in the future.

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