What Does It Mean When You're Overdrawn?

What does it mean when you're overdrawn? What to do if you find yourself with an overdrawn checking account. When you have a checking it account it goes without saying that you should have enough money in...

When you have a checking it account it goes without saying that you should have enough money in your account to cover the checks you have written. Despite most people's best intentions, mistakes can happen and your account becomes overdrawn.


You may occasionally transcribe your numbers wrong or forgot to write down a debit transaction or record a check. If you have a joint account, one person may withdraw money with out telling you and suddenly you don't have enough in your account to cover what you have paid out.

Steve Twirago, personal banker at Chase Bank says, "People don't balance their checkbooks. They sometimes don't realize holds are placed on checks so the funds are not immediately available. Some don't properly keep up with their transactions."

If any of these things happen you may receive a notice from your bank saying that you are overdrawn.

What does it mean when your bank says you are overdrawn?

"Your account is in overdraft and you have insufficient funds. There is not enough money in your account to cover the check you just wrote," explains Twirago.


Some times the bank will cover the check for you and charge you an overdraft fee. Other times the check will be returned unpaid and you will still be charged a fee. This will depend on your particular banking institution and the terms of your account.

The amount of your overdraft fee will be stated on your bank statements. According to Twirago, Chase currently charges $32.00, then $5.00 for each additional day the balance remains below zero, but the amount varies from bank to bank.

This fee is charged per check. If you make one mistake you can start a chain of events causing multiple checks to bounce and your fees will add up quickly.

How quickly will the bank deduct these fees? Twirago says it is usually the following day. If you look at your online banking statement these fees will be listed and the balance of your account will reflect the check and the fees.

Twirago advises, "You should resolve this matter with a personal banker as soon as possible to avoid additional fees."

The best way to protect yourself is to keep on top of your balance and record each transaction as you go. Twirago warns, "It is never wise to send out a check when your balance is low hoping it will not clear until your next deposit."

He gives the following example: "If you're mailing out your mortgage check and it'll take four days to get there and your deposit hits in two days you might think that is OK, but it's a big gamble."

If you have a joint checking account with your spouse it is important to keep the lines of communication open. If the balance is low, talk to your partner. Make sure you are both aware of exactly which checks the other has written, and of any other debits such as automatic payments or debits to avoid the risk of becoming overdrawn.

You can also get overdraft protection from your bank. "This protects your checking account balance from going below zero," says Twirago.

By taking extra care in your record keeping, and asking for overdraft protection, you can be comfortable that you won't be suffering the stigma - or bank fees - of an overdrawn account.

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