How long can your bank account be negative? The Fast Facts

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Even the most financially savvy people can find themselves with a negative bank account balance from time to time – you might be the same.

Although convenient, overdraft fees can soon add up, so it’s a good idea to bring your account back into a positive balance as quickly as possible if you’re dealing with an overdrawn checking account. But with that said, how long can your checking account be overdrawn before more severe consequences occur?

Read on to find out.

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How long can your bank account be negative?

Overdraft products vary from bank to bank. On the whole, your bank won’t take too kindly to you relying on overdrawing and having a negative balance for too long, as it shows that you’re struggling to manage your finances.

Banks typically attempt to notify you when your checking account goes overdrawn so that you can deal with your insufficient funds sooner rather than later.

If your balance remains negative for between 3-31 consecutive business days (each bank’s policy will vary), you may be charged an extended overdraft fee even if you don’t have any more payments scheduled to be taken out. These fees can send your balance even further into the red.

In most cases, banks will close a checking account after 60 days of being overdrawn. Ask your bank about the terms of their overdraft policy to find out the exact length of time your account can remain overdrawn.

If your checking account gets closed because of overdraft issues, you may end up being reported to ChexSystems, a consumer reporting agency. Many banks use ChexSystems to determine whether they should approve your application for a bank account.

Learn More >>> What does an ‘Overdrawn Bank Account’ mean?

“My bank account is negative and I have no money”

Joke about bank account having a negative balance

Let’s say your checking account is overdrawn by $50. If you find that your entire paycheck is being swallowed up by your overdraft and you’re struggling to bring your checking account back into a positive balance, the first step is to speak to your bank to tell them about the problems you’re experiencing.

They may be able to help you by arranging an affordable repayment plan. However, if you still can’t pay off your overdraft, your bank may decide to close your account and then report you to ChexSystems. If this happens, you could have problems opening a checking account elsewhere.

It can be challenging to pay off your overdraft if you don’t have any spare cash lying around. However, it’s not impossible. If your bank will give you a little breathing space to raise some funds, the best thing to do is try to earn some extra money to clear your negative balance. Here are some suggestions to get you started:

  • Sell old items that you no longer need on eBay or host a yard sale
  • Do small jobs for cash. Check out Fiverr, where you can make $5 plus for quick gigs. Or, Upwork, a freelancing platform where you can carry out a range of jobs online
  • See if you can pick up extra hours at your existing job
  • Cash in your loose change collection – coins can add up, and you may have more stashed away than you think

Best ways to avoid becoming overdrawn

Most banks offer overdraft protection plans alongside their checking accounts. There are some plans where you can link another account (for example a savings account) to your checking account. If a transaction takes you overdrawn, funds will be automatically transferred from your linked account into your checking account to cover the overdraft. Flat transfer fees usually apply – check with your bank to find out how much.

Watch out for forms of overdraft protection that aren’t linkable to another of your accounts. These tend to charge you a fee for every overdrawn item, usually in the region of $35 each time and you can be charged more than once in a day.

One way to avoid becoming overdrawn is to opt out of overdraft protection altogether. In this case, your debit card payment will be declined or your check will bounce, and you won’t be able to go overdrawn. However, you’ll likely be charged a Non-Sufficient Funds (NSF) fee by your bank. You may also receive charges from the company that had the transaction returned.

The ideal way to avoid a negative balance is to monitor and control your finances effectively. Doing so will enable you to stay on top of your income and expenditure each month. You’ll also find keeping up with automated payments much easier.

Track your spending by keeping receipts or tally up your finances in a spreadsheet or a budgeting app. There are plenty of these around, including free apps like the Mint app or Prism.

This way, you’ll be able to see beforehand if you’re likely to go overdrawn. You’ll then have time to take action, such as cutting back on your spending in other areas for a while.

Short on cash?

Watch: What to do if your bank account is negative for too long

WAIT! High overdraft fees aren’t the only way your bank is costing you money.

With inflation overheating, you’ve probably heard that interest rates are climbing sharply. That means that for the first time in years, it’s a great time to shop around for a high interest savings account.

The national average interest rate for savings accounts is currently 0.23% APY – that means that if you have $2,500 in a savings account, you’d earn just $5.76 after one year! Move those hard-earned savings to an FDIC-insured bank paying 3.50% APY and you’d earn $81.73 more!

Don’t let your hard-earned savings sit there doing nothing. Check out the rates that you can earn at other banks:

Mitchel Harad

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