Daylight overdraft

Daylight overdraft (called also intraday overdraft) refers to a scenario in which a debit balance occurs in a customer’s account in the course of the banking day and is expected to be repaid by a credit to the account prior to the end of the banking day.

Under most circumstances a daylight overdraft incurred by a customer of bank for an account will not face overdraft fees if the balance is brought positive by the next business day.

An example of a daylight overdraft is making a $100 deposit at an Automated teller machine which allows for instant withdrawal of the first $100 deposited. This atm transaction will post the next day however if you were to transfer the funds from this account to another account using other means (internet, telephone) the funds would be withdrawn that day and will post your account negative the next day.

Another example is the Federal Reserve policy of daylight overdraft when a fee is not imposed on collateralized daylight overdrafts, but a 50 basis points fee is taken on uncollateralized ones.