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Let’s look at what a negative bank account means, some strategies that may help you stay in the black and what to do should you have a negative account balance. But if they don’t because you’ve had multiple overdrafts, for example, pay them right away. Otherwise, your bank could send your debt to collections and damage your credit. It’s best to simply pay what you owe and try to avoid the fees in the future.

This can entail raising income, cutting costs, or looking for financial assistance. 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. However, there are some things you can do to keep your equilibrium from falling below zero. If you can not immediately transfer funds from one account to another, find a way to put funds into the overdrawn account. Perhaps you can scrape together enough money from your spare change or borrow money from a friend.

Win against credit card companies

In the event of an overdrawn account, it helps to take swift, informed action to mitigate further financial damage. Speaking to your bank about their overdrawn account policies can help keep you informed and better prepared for an emergency. When you apply for new checking or savings accounts, banks may look at your record. If they notice an involuntary closure on your bank account history, they may decide not to open the new account you desire. Or they may allow you to open an account while imposing restrictions and hefty fees. Depending on your bank’s policies, continuing to make payments from an overdrawn account could lead the bank to stop allowing payments or to close the account.

You can contact your bank, explain what happened, and ask them to reverse the fee. If you have already paid your balance, that’s a point in your favor. Politely remind them of your history as a reliable and valued customer, and ask to speak to a supervisor if the customer service representative can’t help you. A bank can close your documents requested in a letter of credit transaction lc document account for any reason and without warning.[3] This is called an involuntary closure. A negative balance is what happens when the amount of money in your account is less than zero. Get more from a personalized relationship offering no everyday banking fees, priority service from a dedicated team and special perks and benefits.

You’re now leaving Chase

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.

To prevent a negative bank account, continuous account monitoring is essential. Make careful to regularly check your account balances and monitor your transactions for fraud or other mistakes. By doing this, you can identify any problems as soon as they arise and stop them from getting worse. When you are having financial problems, it might be difficult to keep your bank account balance positive. There are many things you can do to maintain your financial stability, but there may be some that you are missing.


Fortunately, there are several steps you can take to improve your situation and prevent this issue in the future. Check if you have any automatic payments that are about to go through so you can halt them before they overdraw the account again. Most banks have some way of freezing an account to stop fees — if you quit using the account. Always keep an eye on your account balance so you know how much money you have on hand. You can take efforts to mitigate financial loss if you overdraw your bank account. According to the American Bankers Association, if you spend more money than you really have in your account, your bank may or may not pay the transaction.

Transfer Money into the Account

It’s important to take care of your negative bank balance and deposit some money into your checking account as soon as possible. Otherwise, the credit bureaus will be informed, and your credit score may go down. Then, you may have trouble opening accounts with other banks or credit unions. If you overdraw your checking account, cancel all non-essential transactions and payments until your account is positive once again. By continuing to use this account, you may be charged more overdraft and insufficient funds fees.

Building an emergency fund can help you avoid relying on credit cards or overdraft protection to cover these expenses. A financial institution can close an account or freeze it if you fail to pay a negative balance, which might later appear on your credit reports as a collection account. While the bank can close an account with a negative balance, that doesn’t negate the responsibility to pay that balance. Similarly, the client can’t close the account in an attempt to eliminate the balance; the bank is the one that can terminate the account if it has a negative balance. However, having a negative balance can affect your credit indirectly. This is because payment history counts for the biggest chunk of your credit score (35%) under the FICO® system.

Bankman-Fried didn’t directly respond to questions such as whether he was aware his trading firm Alameda Research could incur a negative balance on its FTX account, which… Our technical teams are aware and working to resolve this issue as quickly as they can,” the bank’s customer assistance account responded. An arranged overdraft is unlikely to have a major impact on your credit score as long as you don’t go beyond your overdraft limit or have payments refused. In fact, if you use your overdraft sensibly and regularly pay it off it could improve your credit rating. Paying your bills on time, lowering your debt, and preserving a low credit utilization ratio are all necessary for raising your credit score.

Link your accounts

Banks can only allow you to overdraw if you have opted into their overdraft coverage. If you opt out of this program, the banks can’t charge you overdraft fees for debit card payments or ATM withdrawals. At the time, the bank will charge you several overdraft fees for all transactions that occur when you have no funds. After your bank balance becomes negative, your bank expects you to deposit funds into the bank account to make the balance positive again. Allowing overdraft or NSF fees to accumulate is one of the worst things you can do.

This entails keeping a record of all your outlays, large and small. You can then make modifications as necessary after you have a better knowledge of where your money is going. Most credit models consider negative balances equivalent to a $0 balance, which means negative balances don’t hurt credit scores. When additional items are posted to your account after it goes into the negative, your bank can charge additional fees for each of those bounced checks, which can add up. When your available balance falls into the negative, your bank assesses a nonsufficient funds fee (NSF fee) on the item that caused the balance to drop below zero. What’s more, with EarnIn’s Balance Shield feature, you can finally say goodbye to the anxiety of constantly checking your bank account balance.

Also known as a bank account overdraft, a negative bank account balance is when a person’s balance goes below zero. Usually, this happens when you have an inadequate account balance but continue to make payments. If the bank accepts the payment, your account incurs a debt, making your balance negative. If you’re concerned about bank account fees, there are several free checking accounts that might suit your needs. Be aware that even if the account doesn’t charge monthly maintenance fees, you may get hit for expenses like ATM fees or overdraft fees. For example, a lot of banks will charge you for using an ATM that’s not in their network.

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