How to Deal with an Overdrawn Bank Account

It’s easy to panic or feel overwhelmed when your bank account is in the negative, especially if you need cash urgently. Accruing bank fees from an account in the red also means that when your next paycheck hits, much of it goes into the deficit and fees instead of in your pocket, which can be very demoralizing. It may feel like you’re stuck with no way out.

If you’re one of the majority of Americans living paycheck to paycheck, you too may be able to figure out what went wrong and climb out of this deficit spiral.

If you’re lucky, you may discover that your account is in the negative before the bank charges you for the deficit. It is best to always know what your bank fees are before it’s too late. What are the overdraft fees? Have there been new policy changes lately? Knowing this information can help you make a plan if your account plunges into a deficit.

What To Do When You Realize Your Account Is In The Red

If you discover that your account is in the negative – or about to be – call your bank right away. They may be able to help out and even waive fees before they are applied.

This is especially important if you are a new customer or if this is your first experience going into overdraft. Talking to a person at the bank and explaining that it was a one-time error may be all it takes to waive an overdraft fee. It is possible to negotiate!

Give them a good reason for what happened, but be honest about it.

You may have money coming into the account. If you need that money for other expenses and cannot afford to throw it into the deficit and overdraft fees, hold all checks and transfers until the current matter is resolved. If you’re making money via a gig job – like UberEats or Instacart – you should keep those funds separated so they do not get funneled into repayment automatically.

Speak To Debt Collectors

If you are facing collectors, or if you find yourself late on a monthly bill as a result of your bank account being in the negative, you should speak to the collection agencies and your bill management so they know your current situation.
If you have already been more than the monthly minimum on your debts, cut back to just the minimum to reduce the flow of money out. You can also cancel scheduled transactions from creditors, which can cause overdrafts or make it worse.

Practical Tips When In The Negative

Do whatever you can to avoid spending and accruing more fees. Have a plan so that you can save up and get out of the deficit as fast as you can.

If you have money coming in from other sources, make sure that it does not go into the bank. Instead, consider if it would be worth it to cash the check at another institution so the money you need does not vanish immediately into the deficit.

That being said, if you can afford to put that check towards the deficit and not other expenses, do so.

Understand The Overdraft

The best way to prevent overdrafting your account next time is figuring out how it happened in the first place.

Is this a rare occurrence prompted by specific events? Or does this happen more often as a result of recurring expenses?

Examine your account and your spending habits so that you can understand how the overdraft occurred – and prevent it from happening again.

Most bank fees charge around $30 for going into overdraft, but some banks will let you go further into deficit and keep applying overdraft fees on top of it. In that case, you’re better off cutting up your debit and credit cards to stop that situation in its tracks.