Even if you regularly do your Bank balance online, things happen. You could accidentally turn your account negative, and it can be costly and stressful. A negative Balance of the bank account is of course not positive. One minute yours Bank balance is $ 200. In the next minute, it’s minus $ 200. Ouch!
Instead of panic, stay positive. It is important to act quickly to minimize potential financial damage. Even better, you can do a lot to help one negative balance in the first place and avoid Bank charges.
What is a negative bank account?
A negative Bank account means you have one negative balance. In other words, the balance in yours Bank account fell below $ 0. A negative balance is also known as overdraft.
Why is my bank account negative?
Generally a negative balance or an overdraft occurs because you have spent more money than you have available by:
- Write a check.
- Make an automatic bill payment or other electronic payment.
- Use your Debit card make a purchase.
- Withdraw money from an ATM.
You may not track your balance closely and end up spending beyond it. Or, an automatic bill payment occurs before your paycheck is received.
Several other situations can lead to one negative balance in your Bank account. Here are four more examples:
- You write a check for $ 750 for your rent. If your landlord pays the check, you will receive a negative Bank balance because the amount of the check ($ 750) is greater than the amount of money in your account (for example, $ 600).
- You set up automatic payment on a specific date for your cell phone bill. To cover the $ 75 payment, deposit a check for $ 100 on your account. However, the funds from this check will not be available until the auto bill payment funds have been withdrawn from your account. In this case, your account balance may become negative if the invoice payment exceeds the amount you have in your account.
- You paint your Debit card in a restaurant to pay $ 50. But at the time you didn’t enough money in your account to cover it. This could be yours to send Bank balance into negative territory, depending on how your bank is handling the transaction.
- You prepare for a night out with your friends and head to an ATM to get $ 100 in cash from yours. take off Bank account. However, there is only $ 80 available. In certain circumstances, your bank may allow you to withdraw the $ 100, which becomes one, at least temporarily negative balance.
What are the consequences of a negative bank account?
The consequences of a negative Bank balance can be costly and even yours credit-worthiness.
If you are spending more than you actually have in your account, your bank may or may not cover your transaction, according to the American Bankers Association.
In the best case scenario, the bank will take over the transaction and bill you for one Overdraft fee. A typical one Overdraft fee is $ 35. In fact, the bank will charge you a temporary “loan” fee to cover the transaction. Your bank can determine the number of Overdraft fees that it is charged per day.
A bank can also protect your account by automatically withdrawing money from one linked account at the same bank, e.g. B. a saving account, to your overdrawn checking account. You could also offer a Credit line that offers Overdraft protection.
However, your bank also has the option of declining a transaction without paying it and charging you a fee insufficient funds (NSF) fee. A bank usually charges a NSF fee that is the same amount as one Overdraft fee. Next to one NSF fee, a retailer (such as a grocery store) may charge a fee for a rejected. to raise Debit card purchase or, for example, your landlord may charge a fee for a returned check.
The statistics can be terrifying. American consumers paid $ 12.4 billion Overdraft fees in 2020, according to a study by the Financial Health Network. That’s roughly the equivalent of $ 48 for every adult in the United States
What should I do if I overdraw my account?
if you overlay Her Bank account, you can take steps to mitigate the financial damage. Here are five of them.
Transfer money immediately
If you don’t have another account automatically linked to the account, this is it overdrawn, try to Transfer money from another account to the overdrawn account. This may or may not prevent additional overdrafts or additional overdrafts NSF fees. Make sure the money transferred covers both an overdraft transaction (such as a bill payment) and the overdraft or NSF fees.
Deposit money immediately
When you are unable to Transfer money from one account to another, you will find a way to deposit funds into the account overdrawn account. Maybe you can scrape together enough money from the coins you keep in a jar at home or borrowed from a friend. If you recognize early enough that an overdraft is occurring, you can use the deposited money to avoid an overdraft or NSF fees.
Pay the fees
One of the worst things you can do is take out or overdraft NSF fees go unpaid. If you fail to pay these fees, the bank may close your account, sue you, or report the non-payment to a company that will review and report you saving account Activity. The unpaid fees can become part of your account history and prevent you from opening checks or Savings accounts in the future.
Ask the bank to clear the charges
If you were otherwise a good customer, your bank can waive an overdraft or NSF fee. But if you keep piling up these fees, the bank may not be as polite.
Contact the recipient of the undeliverable check or overdraft transaction
If you’ve written a check that has bounced or made a transaction that your bank declined, contact the recipient as soon as possible. That way, you can set things up with a landlord, restaurant, or whoever should get your payment. You might even be willing to forego a scheduled fee.
Can I still use my debit card if my account is negative?
The ability to your Debit card when your account goes negative depends on whether you have it or not Overdraft protection. Your bank can provide it automatically Overdraft protection for a Withdrawal from the ATM or a Debit card transaction This will send your balance under $ 0. Or it could be a. cover retreat or transaction if you have signed up Overdraft protection. In either case, you will likely be charged some sort of fee.
Tips to avoid a negative bank account
A negative Bank balance can throw your finances out of whack. However, there is a lot you can do to keep your balance from falling below $ 0.
Pay attention to due dates
It is best to pay bills before the due dates, but only after your regular pay days or after money has been deposited into your account on a regular basis. Some recipients of bill payments, such as Credit card Issuers, you can adjust the due dates to reflect the times you receive money Bank account.
Link your accounts
Connect your main line Bank account to a saving account or another account. That way you can Transfer money if you find that your account is in the negative category or is about to get there.
Sign up for overdraft protection
Maybe you can tie your head Bank account to another account or even a Credit card so that the bank automatically covers transactions that include a negative balance. Note, however, that your bank will likely charge a fee for it Overdraft protection Cover. However, this charge becomes likely lower than a normal overdraft or NSF fee.
Set up direct deposit
Have your employer deposit your paycheck directly into your account instead of depositing a paper check issued by your employer. This gives you quicker access to your money.
Monitor your account
Always take care of yours Bank balance so you know how much money you have available. You can do this on your bank’s website or on the mobile app.
Sign up for notifications
If you Opt-in For this service, some banks will send an SMS or email notification if your Bank balance drops below a certain amount (e.g. $ 25).
Set a budget
Setting up a budget can help you keep track of your monthly income and expenses. This can help you avoid spending overruns and overdraft problems.
Start an emergency fund
In general, experts recommend that an emergency fund include: enough money to cover three to six months of daily expenses. You can tap into an emergency fund if you’re about to get one negative balance in your Bank account.
At National Debt Relief, we pride ourselves on empowering people to regain their financial stability through our proven debt relief program. Contact us and speak to a financial professional who will work with you to find the best option to pay off your debt and help you achieve financial independence.