Overdrawn Bank Account Effects

Your may need to restore your bank account.

A negative bank account balance could become costly over time. If you fail to settle an overdrawn account, your banker might limit some of your banking privileges. Items that are posted to your account, such as checks, purchases or service fees may cause your account to become overdrawn if sufficient funds are not available for the each item.

Fees

Overdraft fees may have resulted for purchase for which you had insufficient funds. Some banks charge daily or periodic fees for accounts that remain in overdraft status. An overdrawn bank account can have costly effects if the account holder fails to quickly resolve the deficient balance. Banking fees will vary greatly among institutions; your banker can inform you of specific charges for an overdrawn account.

Usage

An overdrawn account can limit your ability to use your bank account. Until your account ledger is balanced, you may lose access to ATM withdrawals, debit card usage and your ability to write checks on the overdrawn account. An account that remains overdrawn for too long may lead to closure by your bank. Contacting your banker to clear up the overdrawn account balance might enable you to retain your account privileges.

Account History

Accounts that have a recurring overdraft status could impact your ability to qualify for certain loans from your bank. Your banker may decide to close your account if you exhibit above-average overdraft activity, even if your account is not overdrafted for an extended period. An unsatisfactory account history might impact your ability to open another bank account. Your overdrawn account status could be reported to collections agencies or several national credit bureaus.

Consideration

The effects of an overdrawn bank account could be minimal if you promptly contact your bank to resolve the situation. However, an unresolved overdraft balance could lead to a judgment or wage garnishments to recover the amount owed to the bank. Linking your checking account to a savings account might help you to avoid overdraft fees by providing you with a backup source of money in the event that you do not have enough money in your primary account to make a purchase you need. You can speak with your bank about overdraft protection to ensure that you pay for items for which you had insufficient funds.

References

• The Federal Reserve Board: Protecting Yourself From Overdraft and Bounced-Check Fees
• The Federal Reserve Bank: What you Need to Know: New Overdraft Rules for Debit and ATM Cards