You may be caught off guard if you overdraw your account. When your account is in the red, it can be worrisome. Being overwhelmed by this makes it difficult to decide what to do. Fortunately, there are practices that may help you deal with the situation if you find that your account dips to this level. The best piece of advice is to keep your account from going so low in the first place. For this reason, we will also show you how to maintain a positive balance on your account.
What Should You Do If Your Account Turns Negative?
If your account gets overdrawn, you might want to think about the following tips:
- Make sure you are familiar with your bank’s overdraft charges
- Stop using your account
- Determine what you need
- Save until you are no longer in the negatives
- Speak with your bank
- Try to stay away from the negatives in the first place
Make Sure You Are Familiar With Your Bank’s Overdraft Charges
You need to be aware of the situation if your account is overdrawn. As a result, you should have a clear understanding of what your bank’s overdraft fees are. This fee is charged by the majority of banks when an account is overdrawn by a certain amount. There isn’t a standard guideline, so you’ll need to contact your bank for further details. These fees can make the process of putting your account back in order much more difficult. This is because, in addition to what it will cost to get your account back in the black, you will also be responsible for paying these charges. Usually, these fees range from $30 to $35.
Stop Using Your Account
Stopping your account’s activity can be inconvenient, especially if you have automatic payments set up. However, when you stop using your account in such a situation, you do not make things worse. Instead, it can help you. For instance, if your account has a $45 overdraft, it is better to leave it at $45 rather than build up a $175 debt that you would have to pay back only to get your balance back to $0. Moreover, if you continue to use an overdrawn account, it may result in additional fees.
Be mindful that if you have debts to pay, you might want to hold off on depositing your paycheck into your account. That is because the money will be covering the balance that is overdrawn. Consider using a check-cashing service if you need enough money to cover additional costs like an electric bill.
Determine What You Need
Understanding the numbers involved in an overdrawn account is essential. To start building a security cushion and get your balance back to zero, you need to calculate how much money you will need. You should also take into account any outstanding debts and overdraft fees that can affect that balance amount.
Save Until You Are No Longer In the Negatives
Getting your account back to where it should be is what you should concentrate on doing now that you recognize what it needs. The longer you wait to get your account balance out of the red, the more likely it is that the bank will apply further fees and, eventually, cancel your account. It can be difficult to quickly increase your account balance, but you might be able to do so by selling things you do not use anymore.
Speak With Your Bank
You might be surprised to see how understanding your bank is. This means that there is a chance your fees will be waived. For instance, your bank might not charge you if you have never overdrawn your account. Although they are not required to, they might decide to give you a refund. So, you should try to be friendly, despite your anger over your overdrawn account.
On top of that, talking to your bank can be helpful especially if you need some assistance dealing with the situation. Your bank might work with you to establish a repayment plan that will help you better manage your payments in a reasonable manner.
Try To Stay Away From the Negatives In The First Place
While the tips we mentioned above are excellent for helping you once you have entered the negatives, the best piece of advice is to steer clear of them all together! You should keep a few tips in mind to avoid overdrawing your account. Some of these tips are:
- Get Your Finances In Order
- Maintain Your Budget
- Sign Up for Low Balance Notifications
- Avoid Overdraft Services
Get Your Finances In Order
Making a budget is one of the most crucial aspects of your financial wellness. A budget should compare the amount of money you earn to the amount you spend. Let’s say, for example, that you earn $3,000 each month. Along with recognizing your income, you will also want to know how you spend it. For this reason, you should list your expenses and bills for each month. Let’s say your basic expenses include:
- Rent: $1,200
- Car gas: $200
- Utilities: $300
- Groceries: $350
- Phone bill: $130
- Netflix: $20
These expenses mount up! Let’s assume that, in the end, you pay $2,200 in bills per month. This means that if you earn $3,000, the only money left for savings or other expenses is $800. By breaking down your budget, you can have a better understanding of your financial situation as a whole.
Maintain Your Budget
After learning the fundamentals of your budget, you’ll want to stay on top of things to make sure you stick to that budget. To do this, you must keep track of your earnings from all sources, as well as your purchases. This will allow you to be more aware of what’s going on in your account and make smarter decisions! Also, you’ll know when your account is running low, so it will not come as a surprise.
Sign Up for Low Balance Notifications
Most banks provide their customers the chance to sign up for notifications. An example of a particular notification type is a low-balance alert. Even though tracking your spending might help you become more attentive to your finances, this gives an additional layer of security.
Avoid Overdraft Services
It’s critical to remember that each bank will have different specifics regarding overdraft fees. Many banks only charge an overdraft fee if the client enrolls in the bank’s overdraft program. Fortunately, clients can quit the program at any time. Transactions on a negative account will be denied if they are not protected by an overdraft service.
Bottom Line
When your accounts are in the red, it can feel overwhelming and depressing. You can try these helpful tips to fix this situation:
- Make sure you are familiar with your bank’s overdraft charges
- Stop using your account
- Determine what you need
- Save until you are no longer in the negatives
- Speak with your bank
- Try to stay away from the negatives in the first place
When trying to prevent your account from getting in the negatives in the first place, you should:
- Get Your Finances In Order
- Maintain Your Budget
- Sign Up for Low Balance Notifications
- Avoid Overdraft Services
Even though it could seem impossible, managing an overdrawn account is easier than you might think.
