Dena Standley | October 19, 2022
Summary: If your bank account has a negative balance, you need to fix it ASAP. Here is SoloSuit's guide on how to repaid an overdrawn bank account and prevent it from happening again.
We've all been in that situation. You go over budget on a few items one month, and your checking account is overdrawn. Before you realize it, you are in the negative zone. A negative account has profound implications; your account may be temporarily suspended or closed, and ChexSystem may record a closure on your record, making it harder for you to open new bank accounts in the future.
In any case, you can make efforts to correct the issue and prevent it from happening again. It would be best if you acted immediately to avoid a downward spiral of overdrafts, bounced checks, and fines.
Here's everything you should know about how to fix a negative account below.
If your account has a negative balance, you should immediately stop using it. Because of the overdraft fee that your bank charges for each negative transaction, a negative account balance quickly balances snowballs into enormous debt. Anyone who charges transactions from the account increases the debt because each transaction is double charged.
If your bank account amounts have insufficient balance to afford the purchase, your debit card may be refused right away. However, your card may be accepted during the purchase, only charged later with fees that add to your debt. For example, if you went to a store and spent $3,000, but your account only has $2,000 in it when the retailer deposited the check in the bank, you owe $1,000 on the check.
The retailer's bank can either pay him the full amount or let the check "bounce" to your bank and mark it with non-sufficient funds (NSF). If the first scenario occurs, you are liable for the $1,000 overdraft.
Consider a checking account advance if your bank offers one where the bank will lend you the money you need to balance your account at a high-interest rate. To qualify for a checking account advance, you'll probably need to make regular deposits into your account.
If your paycheck is directly deposited into your account every two weeks, your bank may offer you a checking account advance (and your account history shows this). Remember that these advances might come with excessive interest rates and fees, so tread caution when considering this option.
If you cannot pay your negative account balance, try to freeze or close the account because most banks charge a negative account balance fee on a negative account. If you cannot make a deposit, these costs will make it even more challenging to settle your obligation.
Call or visit your local branch to find out what your alternatives are. Depending on your bank, you may quickly close or freeze your account to prevent continued costs.
Call a bank's customer care line; they may waive the first overdraft or returned check cost, especially if it's the first fee for a new account or any account in a new calendar year. This can help you pay off your debt faster.
If you owe too much or don't think you'll be able to resolve your overdrawn account, talk to your bank about creating a plan that will allow you to resolve the issue without being reported to ChexSystems. The bank may offer you a payment plan or terminate your account if you do not repay the money. In any case, you'll have to repay the money you owe.
Americans pay an average of $7 in monthly banking fees. It is essential to understand the options available and ways you can minimize or avoid fees. Banks are required under Federal law to disclose any fees they charge in connection with a deposit account. Ask your bank for the account opening disclosure and fee schedule. All deposit-related fees that your bank can charge are listed in the documents.
Standard fees might include:
For more on account disclosures, visit the FDIC Consumer News January 2021 Issue.
Different banks and credit unions handle overdrafts differently, so it's good to review those facts before opening a checking account. This will also assist you in setting up your account to suit your lifestyle and spending habits.
You may employ a few simple methods and practices to maintain your checking account in the black moving ahead. Here are a few examples:
An overdraft is inconvenient, but it happens. Knowing that you have choices can help you better manage your finances and prevent yourself from falling into more debt. It may be beneficial to create a simple budget if you deal with overdrafts more frequently than you'd like. Having a clear picture of what's coming in—and what's going out—can sometimes be enough to keep you ahead of the financial game.
If you are being sued by your bank for a debt, you should respond immediately. The first step to winning a debt collection lawsuit is to respond with a written Answer. Follow these three steps to answer your debt lawsuit and win in court:
Learn more about these three steps here:
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.
>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)
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