What does It Mean to be Overdrawn?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 July 2018
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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. No matter which occurs, 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 spending more than is in the account increase greatly.


Another road that often leads to overspending 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. As a result, 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 for account holders 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. Failing to keep accurate records of checks issued and deposits made can also 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, the account holder should contact the bank and work out some plans to make sure that the check is paid. At the same time, he or she should not write any more checks until the account is brought back into a positive balance.


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Post 9

Okay, so the banks can't balance their books, hand out huge bonuses to friends and cronies, screw up the economy so bad that the entire global system dang near collapsed and these folks want to make me feel bad and say "Well, you are responsible for the overdraft." No, first off, the fraud that was committed on my account was responsible for my overdraft, yet you guys stole even more in fees. But I guess it's just peachy to preach the virtuous moral high ground when good ol' Uncle Sam hands over billions (that we pay) for your screw ups!

Post 8

I think that the wide use of debit cards is one thing that has led to a lot of overdrawn accounts. It is so easy to use your debit card for something and forget to write it down. Even though I can go online anytime and check my balance, that doesn't show things that have not gone through yet, or things that I have forgotten to record in my checkbook.

Post 7

Being unorganized and poor record keeping have gotten me in trouble before. Before the days of cell phones and texting I would could a letter from my bank informing me that I was overdrawn.

These letters always had a certain "look" to them and I knew even before opening them up they were telling me I was overdrawn I would groan and open up the letter to see how much I was overdrawn by, and how much they had charged me for each transaction.

Like somebody already pointed out, I was already short of money and that was like a kick in the pants. Over the last few years I have been much better about keeping track of my expenses and trying to keep my checkbook balanced. Avoiding overdraft fees is one of the reasons that keeps me motivated to be consistent with this.

Post 6

At my bank I have a free checking account that is linked with a savings account. The savings account is there to help me save some money and also serves as overdraft protection. If there is a check that comes through and there is not enough money in my checking account to pay for it, the bank will take the money from my savings account to cover it. While they do charge a small fee for this service, it is much cheaper than what it would cost me if I didn't have this protection.

Post 5

@OeKc05 -- Each bank is different in the amount they charge for overdrawn checks, but it always seems like a steep price to pay. If someone doesn't know their account is overdrawn, they can easily owe hundreds of dollars in overdraft fees before they even realize they are overdrawn.

This happened with my son and it took him quite awhile before he could pay all of the fees. I think he had around $300 in fees. What is really frustrating is that often when someone is overdrawn they are short of money, and the large overdraft fees just compound the problem.

Post 4

@OeKc05 – My bank charges $30 per transaction, regardless of the amount. I didn't know I was overdrawn, and I wrote two checks that bounced. The fee for each one was $30.

Of course, as soon as I found out, I quit spending money. I really hated the fact that I let my balance get away from me like that. I kicked myself for wasting $60 because of my ignorance.

Post 3

What are the typical overdrawn charges issued by a bank to punish the account holder? Is it an outrageous fee, and does it depend on the amount you are overdrawn by?

Post 2

@feasting – That's weird. Banks usually do make every effort to let you know that your account is overdrawn.

My bank sent me a letter in the mail when it happened to me, and they also sent me an email. Someone had gotten into my account, probably by stealing my debit card number when I ordered something online, and they cleaned me out.

The bank staff were very helpful. They filed papers and an investigation was launched. In just a week, I got all my money back, and they canceled the overdrawn fee.

Now, I never order anything online with my debit card. I use my credit card, because at least that way, they can't take all my money. My credit card company is great about detecting fraud, and I'm not liable for fraudulent charges.

Post 1

I would think that the charges for being overdrawn would be enough to prevent people from losing track of their records. However, some people are just hopelessly disorganized.

My friend wrote a couple of checks on his overdrawn account before finding out that it was overdrawn. The bank actually filed a police report, and he didn't find out about the whole situation until he went to renew his driver's license and found out there was a warrant out for his arrest.

The police told him that if he paid a certain fee, the charges would be dropped. It just seems to me that the bank should have contacted him first before going to the cops!

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