What is the main function of overdraft protection?

The primary function of overdraft protection is to cover overdrafts by transferring funds or utilizing a line of credit when you exceed the available balance in your checking account. This service is designed to prevent transactions from being declined due to insufficient funds, which can help avoid bounced checks, declined debit card transactions, and the associated fees. Essentially, overdraft protection provides a safety net for individuals to manage short-term cash flow issues, allowing them to continue accessing their funds without interruption. This can be especially useful in emergency situations or during months when expenses unexpectedly rise.

The other options do not accurately reflect the purpose of overdraft protection. Increasing interest rates on savings accounts does not relate to managing overdrafts. Insurance against identity theft operates in a completely different realm of financial protection. Lastly, limiting withdrawals from an account directly contradicts the intent of overdraft protection, which is to facilitate access to funds even when the balance is low.