How To Recover From Being Overdrawn

couple-overdrawn.jpg
Chris Red/Stone/Getty Images

Everyone occasionally makes a mistake when it comes to a checking account. If you find yourself overdrawn, you need to quickly rectify the situation. If you do not, you may find yourself in a spiral of fees and bounced items that is hard to get recover from. Most banks charge at least twenty five dollars for an item they return (not to mention the store charges you a returned check fee). Additionally, banks can charge as much as forty dollars for items that they pay while allowing your account to go negative.

You may end up depositing a paycheck and the entire thing covering your overdraft balance and fees. Here are the five things you should do to rectify the situation.

Stop Using the Account

You should stop using your checking account until you have sorted everything out. Cash your paycheck instead of depositing it. If you have direct deposit, you may consider changing that with your employer. You need to have money to cover your monthly expenses, but these should be just your basic necessities until you have brought the account into the positive. If you have direct deposit, it can be very difficult to recover since the bank continues to use your check to cover your negative overdraft and other fees. One option is to change your direct deposit to another account, but banks will not let you open a new account if your have a n account that is currently overdrawn. 

  • Stop all automatic payments from the account.
  • Consider putting your subscriptions on hold.
  • Some gym memberships will let you pause your membership for a month or two. Contact yours to see if that is possible.

Balance Your Account

You need to balance your account with what the bank has charged you. This will give you an idea of how much you need to turn the situation around.

You need to add in any returned check fees that you may have been billed. The easiest way to monitor this is to log into your account online. However, you can also speak to a customer service agent on the phone or in person at your bank. If you are not regularly balancing your account, you may end up in trouble. Start by recording the transactions you make each day and marking off when they clear your account. It needs to be more than just checking your balance each day. 

  • You may need to go back several months to see where the first mistake was made.
  • This can snowball quickly and with overdraft fees being between $20.00 and $20.00 it can add up quickly.
  • Determine how much you need to bring your account back into the positive immediately.

Bring Your Account Balance Positive As Soon As Possible

Bring your account back into the positive. If you are using cash to pay for your purchases currently you should deposit some into your checking account each pay period. You may want to talk to your customer service representative. Most banks will waive the first overdraft or returned check fee if you ask them nicely. Do not demand to have it reversed, since you did make a mistake if you are rude you may be out of luck.

The customer service representative is under no obligation to reverse the fee. 

  • In situations where this is the first time it has happened, it never hurts to ask to have some of the fees forgiven. This can make it easier to recover, since you may also be facing fees at stores or with other businesses.
  • Your bank may also charge a daily fee for each day you are overdrawn, if you are on a plan to pay back the money, it may be willing to waive the fee. You will have to ask.
  • If possible, you may consider borrowing the money from someone to bring your account into the positive as quickly as possible.

Speak to Your Bank

If your negative total is too much, and you do not think you will be able to bring it into the positive in the next week, you will need to speak with your bank and set up a plan that will allow you to fix the problem without being reported to ChexSystems.

Your bank may allow you to make payments over a few weeks so that you can fix the account while still being able to meet your other obligations. If they close the account they will report you to ChexSystems and you will not be able to open an account at another bank. It is important that you pay this off as quickly as possible.

  • The bank may set up a plan for you to pay the amount back or they may close your account. Either way you will still owe the money.
  • Communication with your bank is the best way to deal with the problem and find possible solutions.

Continue to Monitor Your Account

Once you have cleared everything up, you can continue to use the same account, but it is important to keep a running ledger to prevent this from happening again. It is fairly easy to check your account each day to see what has cleared and what has not, especially with mobile banking. It also makes it easier to catch mistakes that the bank may have made or charges that you forgot to enter into your ledger or software. You cannot simply look at the balance you get online or from the ATM and assume that it is the correct balance, because not all of your checks or debit card transactions may have cleared the account, which why you need to keep a running balance.