What happens if bank balance shows negative balance?

What Happens If Bank Balance Shows Negative Balance?

A negative bank balance occurs when you withdraw more money than you have available in your account. This can happen for a variety of reasons, such as:

• Writing a check for more than the amount in your account
• Using a debit card to make a purchase that exceeds your available balance
• Overdrawing your account through online banking or an ATM

In most cases, your bank will cover the overdraft and allow you to make the transaction. However, this is not free. You will typically be charged an overdraft fee, which can range from $25 to $35. In addition, you may also be charged an interest rate on the overdraft amount.

If your negative bank balance is not covered by overdraft protection, your bank may return the check or debit card transaction. This can result in additional fees, such as a non-sufficient funds (NSF) fee. NSF fees can also range from $25 to $35.

Repeated overdrafts can damage your credit score. Banks and other lenders report negative account activity to the credit bureaus, which can lower your credit score. A low credit score can make it difficult to qualify for loans and other forms of credit.

In addition, your bank may close your account if you have a persistent negative balance. This can make it difficult to manage your finances and can lead to further financial problems.

If you find yourself with a negative bank balance, it is important to take steps to correct the situation as soon as possible. You can do this by:

• Depositing money into your account
• Transferring money from another account
• Getting a loan from a friend or family member
• Contacting your bank to see if you are eligible for a hardship program

Once you have corrected the negative balance, it is important to track your spending more carefully and avoid overdrafting your account in the future.