What to do When Your Bank Account Hits Zero…(or less)

It’s the one thing that everyone dreads when they know they have limited funds and don’t have much (or any) cash to make the purchase they are standing in the check-out line for: a declined card.

Yes, this (sort of) happened to me today. And yes, I actually had less than zero in my checking/debit account. How is that possible, you may wonder.

Well, when you shop at a store and pay with a debit card, the cashiers don’t always ask “Debit or credit?” So when my mom and I went shopping for our pre-paid phone cards and groceries late last week — and I paid because she doesn’t get her paycheck until tomorrow — the cashier just entered it as credit. At my bank, this takes about two to three business days to process. When the bank opened this morning, they decided to process all of my transactions at once (lucky me!), resulting in my account being overdrawn.

I was slightly mad at this, as I got the alert email as I headed to buy lunch at work…luckily I had $5 on me to buy chicken and fries, and I refilled the big mug that held my morning coffee with water (which is one of my favorite things: free).

I was able to do a quick fix on my account when I got home from work. I had some money in my savings account, which is attached to my checking account thanks to my bank’s “student account” set up. I put just enough in there to get me out of the negative (-$15) and leave a little bit that can tide me over until my next paycheck comes through Friday.

You won’t always be able to find such a quick fix though, unfortunately. You may not have linked accounts, or a lot of money to cover any overdrawn accounts. Here are a few facts about overdrawing on your account that can be useful to protecting yourself:

  • Most people don’t realize that they have overdrawn their account until it’s too late! It sucks to look at your account an see the negative sign where your balance was, or to have your card denied when trying to pay for something. The best way to insure this does not happen is to:
  • Create a budget!! A budget can be your best friend, especially in college when finances are tight and you don’t always have the ability to generate a large income to cover all of your expenses and then some.
  • According to a study by the Federal Deposit Insurance Corporation (FDIC), overdraft fees can range from $10 to $38, with the median being $27. Banks can also charge an additional, daily fee (such as $5 or $10) for accounts that remain overdrawn for a length of time.

Talk to your bank to find out how they handle overdraft fees. Talk to your parents (or spouse) so that you have a plan if it does happen. Trust me, you don’t want to pay your bank a bunch of money you don’t have because you weren’t careful with what you did have.

What do you do to make sure this doesn’t happen to you? Comment below!

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