Budgeting

My Bank Account Is Overdrawn, and I Have No Money

No one wants to check their bank account and see that their account is overdrawn; however, it has likely happened to everyone at some point! If your bank account is overdrawn, it will be best to act quickly, as the longer your account is overdrawn, the more fees you may face. But don’t panic; there are solutions available, even if you don’t have money at hand. Keep reading for your options if your bank account is overdrawn. 

An Overview of Bank Overdraft Fees

Overdraft fees occur when you have overdraft protection—a feature that ensures complete transactions—in place. When you sign up for a checking account, you will have the option to choose between having this protection in place in the case that you spend more money than you have available in your bank account. There are a few kinds of bank overdraft fees that are out there: 

The Basic Overdraft Fee

The basic overdraft fee occurs when you have an overdrawn account that goes into a negative balance. An overdraft ranges from $30 to $40, depending on the financial institution you have a checking account with. 

An Overdraft Transfer Fee

If your primary bank account is overdrawn and you have another bank account linked to the account, your first instinct may be to transfer funds from that secondary account. However, there may be a transfer fee that a bank or credit union may charge. Fees generally range from $10 to $12 for each transfer. This option can be a short-term solution for a negative balance, as it can protect you from more fees; however, you will be paying for each transaction. 

An Extended Overdraft Fee

The extended overdraft fee, also called the sustained overdraft fee or extended balance overdraft fee, occurs when you leave your account in a negative balance for several days. Usually, an extended overdraft fee kicks in if you have an overdrawn account for five days or more. Most banks charge an extended overdraft fee every day after the five days or every week.

A Non-sufficient Funds Fee (NSF)

An NSF fee occurs if you don’t have overdraft protection in place, and a transaction occurs while you have insufficient funds. If you have overdraft protection in place, you don’t have to worry about an NSF but an overdraft fee instead. 

Actions To Take When Your Bank Account Is Overdrawn, and You Have No Money

Here are some things you can do after finding out your bank account is overdrawn: 

Figure Out How Much Money You Need for a Positive Balance

With an overdrawn bank account, the first step you should take is to figure out exactly how much money you need to bring your account into a positive balance. This can be a little more complicated when you have had an overdrawn bank account for more than a few days. The easiest way to check your account balance is to go online and see what transactions were made and all the fees incurred. To bring your account back into a positive balance, you will have to also take care of all overdraft fees. Also, ensure that you factor in any scheduled automated payments that day or week. 

Do What Is Needed to Balance Your Checking Account

Once you figure out exactly how much you need to balance your checking account, you will need to figure out where you will get the money to bring your account balance to a positive. For some people, transferring money from a savings account may be worth the overdraft transfer fee. 

If you have cash at hand or a check, you can deposit the funds; the quickest way to do this is to head to an ATM or your local bank branch. In some cases, if you deposit the required funds soon after the overdraft fees (usually on the same day or the next day), your bank may remove an overdraft fee. 

If you don’t have the money at hand, you can consider options to borrow funds or pursue work that can help supplement your income quickly. When borrowing, you can ask a friend or family member to lend you some money. Consider a standard personal loan or credit card if you have a decent credit score. There are also online no credit check loans, cash advance loans, and bad credit personal loan options that you can inquire about. 

Stop Using the Account Until Your Next Deposit

Another thing that you should do immediately is to stop using the account and any debit card transactions. Additional transactions that occur after an overdraft will only add fees to your account. Don’t buy anything or pay any bills through debit until you know that your account balance is back in the positive and you have enough money! Also, cancel any automatic payments, bills, and subscriptions to eliminate additional charges and fees. 

Talk to Your Bank Representative

If it is the first time you face overdraft fees on your checking account, talk to a bank representative to try to get those overdraft fees refunded! In many cases, your bank may waive your first overdraft fee and potentially reduce any other incurred fees—even though they are not obligated to do so. If you cannot repay your fees upfront, you may be able to work out a payment plan with your bank. 

Take Steps To Avoid Future Overdrafts

No one wants to deal with the cycle of overdraft fees. The good news is that there are things you can do moving forward to avoid future overdrafts with your checking account: 

Sign Up for Low Balance Alerts

Low balance alerts can be set up online through most major banks. You can set up a minimum amount for the alert, and anytime your account goes below that, you will get an alert via email or text. This alert can help transfer money if needed before your account is overdrawn or not use your debit card until you have the necessary funds. 

Track and Manage Spending and Account Balance

Another thing you can do to prevent future overdrafts is to track all of your spending and deposits into your bank accounts. Creating a personalized budget can be a great way to know exactly how much money you have coming in and going out. And then, you can go online to see precisely when spending and deposits have been made. 

Have a Linked Account To Avoid Overdraft Fees

Another way to protect yourself is to have a linked savings account or credit account to your checking. Having multiple accounts with one bank can make it easy to transfer money from one account to another. For most people, their savings accounts are the first place they go when they need some extra cushioning for their checking accounts. When your bank accounts are linked, you can send money via direct deposit in a matter of minutes to prevent overdraft. 

Time Automatic Bills Strategically

Another thing you can do to avoid overdraft fees is strategically plan your monthly bills. Most people have their monthly bills paid through their online accounts. Let’s say that you get paid twice a month, one time on the 15th and the other at the end of the month. It would make the most sense to have your bills set up to be paid a day after each of your paydays. That way, you don’t have to worry about all your recurring transactions going through at once, potentially leading to an account being overdrawn. 

Consider Not Having Overdraft Protection

Some bank accounts may have built-in overdraft protection, while you may have to opt-in with others. Either way, if you don’t opt out of overdraft protection, you won’t have to worry about paying overdraft fees. On the other hand, your transactions will be declined without this protection in any debit card transactions that go over the available funds in your bank account. And there may be a NSF fee instead.

Conclusion

When your account is in overdraft, don’t panic! Most people have faced not having enough money in their accounts before! The good news is that there are actions that you can take to bring your balance back into the positive. Once everything is back to normal with your bank account, there are things you can do to avoid future overdraft transactions and fees.