How Long Can Your Bank Account Be Negative?

negative bank account

Banks are financial institutions that offer several financial services. These services range from loans, checking accounts, savings accounts, etc. Ever since the introduction of banks, individuals have made them the trusted haven for their money. As a customer, you are provided with an individual account to deposit your funds and withdraw them whenever you want. However, sometimes, you may end up withdrawing more than what you have, thus resulting in a negative balance. Banks frown at maintaining such status for a long time. Considering that, you may want to know long can your account be negative.

There is no time frame as to how long your account should stay negative. Banks don’t expect you to leave a negative account for a long time. Once your account remains negative for 60 days or more, it may be closed by the bank.

You aren’t expected to spend more than what you have in your bank account. However, some situations may require you to spend $500 when you have just $400 sitting in your bank account. Of course, when you make such transactions, it will go through, but that means you’ll have a negative balance which is not good for you. Having a negative balance could result in you paying hefty charges. Furthermore, if you keep the account that way for a long time, your bank could end up shutting it. This article will explain a few things about overdraft and how long you should have your bank account be negative.

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How Long Can Your Bank Account Be Negative?

When you open a bank account, you are expected to spend whatever you deposit in the account and nothing more. So if you deposited $400, you are only allowed to spend the $400. However, due to a measure put in place by some banks,  if you initiate a transaction that surpass what you have in your account, it may allow it to go through. In that case, you’ll be lending the difference from your bank to cover the purchase. The result is usually a negative bank account.

When you leave your deposit account negative, your bank can impose fees, freeze the account and even end up closing it. Bank accounts that are shut with negative balances are always reported to credit agencies and come up on your credit report as unpaid debts. These accounts negatively affect your credit score and stay on your report for up to seven years!

What is a Negative Account?

When your account balance is less than zero, you have a negative bank account, synonymous with an overdraft. This occurs when you attempt to initiate payment that is more than your available balance. If the bank allows the payment even if you have inadequate funds to cover it, your account becomes negative.

For instance, you have $1000 in your checking account and write a $1200 check. If the bank allows this payment to go through, you end up with an account of minus $200, as that is the difference between how much money you had in the account and how much the bank disbursed to the recipient of your check. In that case, the bank is lending you money to cover up the difference. And, of course, you are required to pay up ASAP.

Leaving your bank account negative for too long is not advisable. That said, how long can your account be negative? Is there any specific timeframe? As we progress in this article, I’ll let you know.

Why Is My Bank Account Negative?

Your bank account doesn’t become negative just like that. This usually happens for several reasons. First off, if you lose track of how much is in your bank account and end up spending more than your available balance, you’ll overdraft your account. Or, if you deposit a check and then make a payment immediately before the funds are available in your account, you may end up with a negative account.

Miscalculations and Errors Can Occur:

You could lose track of a payment you formerly scheduled or a purchase you made earlier in the month. You might wrongly assume that a withdrawal won’t be processed for a few days and that a deposit will clear in the meantime.

Also, you can mistakenly withdraw too much if you make an error when writing a check.

If you have multiple accounts at the same bank, confusion regarding which account you are using can also result in an overdraft. If you overdraw an account, your balance on that account will become negative even if you have adequate funds in another account to cover the payment, unless you arranged with the bank in advance to transfer money between accounts in circumstances like this.

You see, there is no specific time frame for this. However, you should note that if you leave your account negative for too long, your bank will freeze it and eventually close it. That’s not all. After closing it, they will report it to the credit agencies, and by now, you should know what that means for you and your chances of getting a loan in the future.

Generally, a bank will close your account if you leave it negative for 60 days. What about credit unions? Credit unions will shut your account if you leave it negative for 45 days. That said, it makes sense to bring your account balance positive as soon as possible. Also, always ensure that you have enough money in your bank account to cover potential purchases or transactions.

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What Happens if Your Bank Account Stays Negative?

When you spend more than what you have in your bank account, you tend to overdraw it. When this happens, your bank account becomes negative, meaning you owe your bank the negative balance. You are expected to make it positive as soon as possible. However, if you fail to and your bank account remains negative, what will happen?

When you overdraft your bank account, your bank charges fees which can be around $35. If your account stays negative for a long time, your bank may decide to shut it.

Always plan for huge expenses. And shy away from always overrating your account. But, of course, you should only do this in urgent situations and ensure you pay what you owe in time.

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