What Happens If Your Bank Account Is Negative For Too Long?


Your Bank Account

With your bank overdraft protection, you can make a payment even if there isn’t enough money in a bank account. In other words, you can purchase a goods worth $500, even if you have $300 in a bank account. An overdraft protection no doubt has its benefits. However, just like everything else, an overdraft protection has its fair share of disadvantages. If you have the habit of always keeping your bank account in the negative, you’ll have to be cautions.

If your bank account is negative for too long, your bank will close your account and report it to a debit bureau, which may make it pretty difficult for you to open an account in the future.

We all hate liabilities. If our car gives us consistent problems, we would make effort to change it or find a way to fix it permanently. The same goes with banks. Banks hate liabilities. If they discover that you are an irresponsible customer or you pose a huge liability to them, they will surely cut you off. Remember, banks can close your account anytime; it’s legal. So if you keep your account negative for too long, don’t you think you are already becoming a liability to your bank? What do you think will happen? Read on to find out!

What Happens If a Bank Closes Your Account With Money in It?

What Happens If Your Bank Account Is Negative For Too Long?

Banks usually offer their customers checking accounts. With a checking account, you have a place where you can safely store your money and withdraw it whenever the need arises. Your checking account allows you to make payment for a product, go watch a movie, or even send money to a friend without having to carry cash around.

Mind you, checking accounts aren’t designed to let you use more than you have. However, if that happens due to one reason or the other, your bank can charge you fees, make you pay it back, or in some cases, close your account.

Banks expect you to spend within your means. But, whenever you overdraft your account, probably because you ran out of cash while making a purchase, you are often expected to return the money quickly.

Before I delve into the main topic of this article, it is best you understand what overdraft is.

What Is Overdraft?

An overdraft is a very common term. It usually occur when you take more money out of your checking account than you have in it. In simpler terms, an overdraft can happen when you take out $30 from an account that has just $10.

An overdraft can happen for several reasons. However, one of the main reasons why this situation often occur is because the transactions you make don’t often immediately get reflected on your account. So, it’s very possible that you could continue spending without realizing that you’ve overdrafted the account ( taken more than you have in the account).

Sometimes, your bank, being aware that you’ve spent too much will still approve the charge to save you from being declined. Overdrafts can also occur if you deposit money into your account, but along the way something goes wrong and it isn’t credited to the account in time.

When Your Account Becomes Negative?

When you spend more than you have In your account, the balance becomes negative, thus attracting an overdraft fee from your bank. The overdraft fee ( which is around $35) imposed on you would make your account more negative.

Sometimes, your bank will charge you overdraft fees for each transaction you make when you have no money in your account. Once you overdraw your account, your bank expects you to bring back your account to positive a balance.

Having understood how an overdraft works, you may be thinking, “what would happen if my balance stays negative for too long”

If your balance stays negative for too long it means you are refusing to put money into your account to bring your balance back to a positive balance. When this happens, your bank will close your account.

In addition, if you often have a negative balance, your bank will close your account as well. Mind you, once your account is blocked, you’ll still owe the money to your bank. However, that would be the least of your worries.

It is important you note that banks have their own type of reporting bureaus, similar to credit bureaus. And once your bank reports you to these bureaus, it would be hard to open another account with a different bank, especially if you are yet to pay what you owe.

I bet you wouldn’t want to be in a situation whereby you can’t open an account. How do you perform transactions? So the best way to avoid the closure of your account due to keeping a negative balance for too long is by paying close attention to your account.

Another way to prevent such an ugly situation is by setting aside extra cash in a savings account connected to your checking account. If for one reason or the other you have an overdraft, your bank will use the money in your savings account to cover up the transaction. This option may come with a fee. However, it is still advisable that you embrace this option than owe your bank money.

What Does Transaction Time Out in ATM Means?

What Happens If I Don’t Pay My Negative Bank Balance?

The ability to overdraw your account can come in handy in some situations. One of those situations is when you intend on making an urgent purchase but find out that your balance is $10 or $30 short of the price tag. In that case, you can go ahead and make the purchase with an overdraft protection. However, to escape the consequences of an overdraft, it is important you pay what you owe in time.

Failure to pay your negative balance could result in the closure of your account. Your bank can take further action by reporting you to the debit bureau.

Overdrafts are not bad. However, when you overdraft your account, your bank may have issue with you that could lead to the closure of your account.

Recent Posts