What do you do when the money in your account isn’t enough to cover a purchase? While some may decide not to go through with the purchase, those with overdraft protection may go ahead with it. With overdraft protection, you can make transactions exceeding the balance in your checking account. However, can we say the same for withdrawals? Can you withdraw money from your savings if your checking is in the red?
Yes, you can withdraw money from your savings if your checking is negative. However, if you do so, you’ll have to be ready for the repercussions of such action. One of the consequences is an overdraft fee.
Being able to overdraw your account can make it handy in some tight situations, so it makes sense to want to understand how it works. Can you take out money from your savings if your checking is overdrawn? What is an overdrawn or negative bank account? I have discussed those in this post.
Can I Still Use Online Banking if My Card Is Blocked?
Can I Withdraw Money From My Savings if My Checking Is Negative?
Before we discuss the possibility of withdrawing money from your savings if your checking is in the red, let’s first understand what a negative account balance is.
Whenever an individual checking account balance goes below zero, the person has a minus bank account, which is also regarded as an overrun bank account. This often happens whenever you continue making payments while having inadequate funds in your bank account.
For a deeper understanding, look at this example:
Let’s assume you purchased $100 worth of gadget and paid with a check. Nevertheless, the bank only includes $60 when the retailer puts the checks in the institution, suggesting that you owe the business $40.
One of the two factors may happen in this situation: the check bounces. Or your bank gives the vendor the whole amount. You will have to pay a fine of $30 for the overspending if the latter scenario occurs.
Why Does My Bank Account Balance Show a Negative Balance?
The bank account can have a bad balance for many purposes. You may possess a negative number if you lodge a check and pay a bill before the funds appear in your account. Secondly, you may forget how much funds are in your accounts and end up paying for items worth far more than your current balance.
It is normal to become confused about which account to use to settle a bill when you have many accounts with about the same bank. In this case, even if your other accounts receive enough funds, your bank balance can have a negative value. Furthermore, there are some ways to have negative bank value without issuing a check. Here are some of them:
- Debit card use
- Direct deposit into your bank account
- Electronic payment methods, such as scheduled installments, are more popular.
- Transactions at ATMs
Can You Take Out Funds From Your Savings if Your Checking Is in the Red?
Of course! As said above, if your checking account is negative. You may take money out of your savings account. Your bank is likely to impose many consequences at this time. Here are some of the repercussions:
- Fee for Overdraft
If you pay a bill or deal that leads to a negative account balance, your bank will charge you fees for an overrun. If you approve the costs, the institution will probably charge an additional fee for each direct debit transaction or ATM activity that brings your checking account beneath zero.
When you are low on cash, the institution will charge you many overdraft fees for any purchase you initiate. If your bank account sum falls beneath 0, your bank will request that you send cash to boost it back to zero.
- Account Termination
If your bank account continues to have a negative balance, your institution can close it. The same applies if your account often goes negative. To find out more about the bank’s particular operations, ensure you contact the bank or review the disclaimer you got after setting up the account. When you shut a checking account, your institution notifies a section that keeps the data for 7-10 years. As a consequence, closing your account doesn’t mean you don’t owe the bank any money.
- Debt Collection and the Credit Effect
In alternative to suspending your account, institutions may report you to their bureaus, which seem to be like credit bureaus. Opening a checking account with another institution in your country or abroad becomes hard after your name is registered with these institutions.
You can also be given a choice of opening an account, which comes with additional costs and restrictions. You might, for example, be forced to keep a fixed sum in your account that cannot be withdrawn.
Can I Still Use My Debit Card if My Account Is Overdrawn?
What Happens if Your Bank Account Has a Negative Balance?
If you have a negative number in your bank account, the institution may charge you overdrafts, block your account, or even close it if the deficit continues. Banks often reveal closed bank balances to credit agencies with a negative balance. These details can be seen under the title “unpaid debts” on your credit report.
How Will You Be Able to Maintain Your Bank Account in the Red?
The longer it takes to shut a deficit bank account differs according to the rules of each bank. The size of the negative value and the customer’s banking history are further considerations. On the flip side, most banks will need 30 to 4 months to close deleterious accounts.
