Finding out that one is overdrawn at the bank can be a sobering experience. Essentially, a checking account is overdrawn when the account holder issues checks that have a face value of more than the balance of the account. Typically, banks charge what is referred to as an overdraft fee, which is a penalty for transactions that require more funds than the account has available.

In some cases, banks will cover the checks presented for payment, and debit the amount on the account, resulting in a negative balance. In other cases, the bank will reject the check. In either case, the overdraft fee is still incurred, unless the account holder has some form of overdraft protection arranged with the bank.

There can be several reasons why an account may become overdrawn. The most common explanation is simply poor record keeping on the part of the account holder. Rather than deducting check amounts from the available balance with the use of a check register, the account holder puts off the recording until later. When this happens, the chances of forgetting to record a check number, or to remember the exact amount, are quite good. This makes it all the easier to write more checks on the account, assuming there are funds to cover all the transactions. As more checks are written and not recorded properly, the chances of being overdrawn increase greatly.

Another road that often leads to overdrawn checking accounts is betting that a deposit will be posted before issued checks make it to the bank. For example, a check is issued on Wednesday, in hopes that a payroll deposit will be recorded Friday morning. Unfortunately, the check is posted first on Friday morning, with the payroll deposit not being received until late in the day. Thus, the payroll deposit is not posted to the account until the following business day. The result in an overdrawn checking account.

While anyone can make an honest mistake now and then, it is important to always ensure that there are funds to draw against in the checking account. Issuing checks in the anticipation of a deposit can be a costly business, with both the account holder paying overdraft fees, and usually the recipient of the check charging some sort of penalties as well. Also, failing to keep accurate records of checks issued and deposits made can lead to a great deal of legal issues as well. An individual who is known to overdraw a checking account on a regular basis may be viewed as intentionally writing bad checks, an activity that is often fined and can result in an arrest and jail time.

When a checking account becomes overdrawn, it is important to take care of the situation as soon as possible. If the overdraft is the result of an honest mistake, contact your bank and work out some plans to handle the amount that the account is overdrawn. At the same time, do not issue any more checks until the account is brought back into a positive balance.