However, in either case, you will save a significant amount of money that would otherwise result in a charge for NSF (non-sufficient funds) or overdraft fees. If you had $100 in your checking account and a transaction of $150 was processed, then your account would be $50 overdrawn or $50 in the negative. You have spent more than you have available, and your bank or credit union has covered the difference. Having a negative bank account balance is more complex than paying back the $50 to get your account back to a positive balance.

For example, you can opt out of debit card and ATM overdraft coverage so that your card simply gets declined if you don’t have enough funds. Or you can link your checking account to a savings account that can cover the difference if you come up short. Any number of things can lead to a negative balance in your bank account, from debit card transactions to automatic payments to delayed checks. Monitoring your finances can help you avoid costly fees and problems that can ultimately affect your credit if you are unable to repay what you owe. If you have a negative bank account, the financial institution will issue an overdraft or Nsf fees. But what if you cannot afford to recover a negative balance at the moment?

• This personal finance option is usually available to people who have yet to have their accounts overdrawn repeatedly.
• But what if you cannot afford to recover a negative balance at the moment?
• A negative bank balance, also known as a bank account overdraft, occurs when a person’s bank account balance falls below zero.
• Monitoring your finances can help you avoid costly fees and problems that can ultimately affect your credit if you are unable to repay what you owe.
• In this way, a persistent negative bank account can impact your credit score, cautions the Consumer Financial Protection Bureau.

This means you will have to pay the overdraft fee and then the amount of your negative balance. Set up a regular practice of checking your available balances on at least a weekly cycle. If your bank balance commonly dips under $100, you may want to do this daily. Unless you have an overdraft agreement with your bank, most banks will stop further transactions from going through via your debit card or withdrawals. They’ll also prevent further draft activity and will refuse checks.

Is Your Bank Account Negative? How to Fix It

The multiple fees assessed for bounced checks and overdrawing can dig a hole into your personal finances that is hard to climb out of. Getting the account current quickly is critical, and safeguarding yourself against an overdrawn account and the resultant bank fees is worth the effort. Banks generally will not close an overdrawn checking account until you deposit money and bring the account current.

A budget enables you to allocate your funds in a manner consistent with your financial objectives. Knowing exactly how much you can afford to spend in each category can help you remain within your budget and prevent overpaying. Connect your primary bank account to a savings or other account. With this method, you can transfer funds when you see your account is in the negative or is soon to enter it. If you can not immediately transfer funds from one account to another, find a way to put funds into the overdrawn account.

This will help you understand your financial standing and how long it may take to bring your account back to a positive balance. Mobile banking makes it easy to keep up with your banking activity and your xero feature roundup account balance. And many banks now notify you when you’ve reached a certain threshold in your account. If these aren’t options, keeping accurate records will help you avoid an overdraft on your account.

While it’s not a huge deal for lower balances, accounts with thousands of dollars or more can earn significant monthly interest. Due to the power of compounding, switching to an account like a high-yield savings account can supercharge your bank account interest over the long term. I then deposited money into my bank account and sent it to paypal.

Consequences of Overdrawing

If you suspect any kind of fraud, then immediately contact your bank’s customer helpline number or bank branch. Another approach to keep your bank account from going negative is to increase your income. Find ways to increase your income, such as by taking on a side job or doing freelance work. You can enhance your financial status and cash flow by doing this. Rather than depositing a paper cheque provided by your work, have your employer direct deposit your paycheck into your account.

Take control of your credit today.

Another efficient method of preventing a negative bank account is by cutting expenses. Look for ways to cut costs, such as cutting back on eating out or terminating pointless subscriptions. You can then have more money available to put toward your financial objectives. You can prevent a negative balance in your bank account by setting financial goals.

You may be able to tie your main bank account to another account or even a credit card so that the bank automatically covers transactions that create a negative balance. Keep in mind, though, that your bank probably will charge a fee for overdraft protection coverage. However, this fee likely will be lower than a standard overdraft or NSF fee.

Consider overdraft protection

When you switch banks, there’s no reason to rush and close an old account with no recurring fees. A recurring charge you forgot to move could lead to fees and hassles that make keeping your old account a bit longer a good idea in some situations. If you don’t know about an overdrawn account or ignore it, the bank could eventually take legal action against you. The amount your account is overdrawn is a legal debt you owe, which means the bank can sue you and use legal remedies such as wage garnishment to get the money. HDFC Bank, for example, doesn’t charge any fee if the customer closes the account within 14 days.

Savings Accounts & CDs

If you have automatic payments set up for bills or subscriptions, and you don’t have enough money in your account to cover them, you may be charged an insufficient funds fee. Banks are entitled to charge an overdraft fee for each transaction that results in a negative balance. These can add up quickly, especially if you’re using your debit card for multiple small transactions in a short span of time. The typical overdraft fee charged by banks is between $30 and $35. A negative bank balance occurs whenever your bank account goes below $0.

The ability to use your debit card when your account is negative depends on whether or not you have overdraft protection. Your bank may automatically provide overdraft protection for an ATM withdrawal or a debit card transaction that sends your balance below $0. Or it might cover a withdrawal or transaction if you’ve signed up for overdraft protection.

According to the Truth in Lending Act, card issuers must refund any negative balance over $1 within a reasonable timeframe. However, manually requesting a refund through your online account or by calling the number on the back of your phone will speed up the process. However, it is unlikely that a financial institution will keep a negative account open indefinitely. Banks do have the right to force the involuntary closure of your account.

The EarnIn Card is issued
pursuant to a license from Visa USA Inc. Aim to save enough to cover three to six months’ worth of living expenses. Start small by setting aside a portion of your monthly income and gradually increasing your savings.