When you overdraw your bank account, the rules of most states require that closing your bank account if it is overdrawn for a period of 60 consecutive days. Many banks close accounts discovered long before the 60-day mark, and your bank may freeze your account as soon as the balance falls below zero.
Your account becomes negative if the charges on your account exceed the available balance. Your bank may assess an overdraft fee for each item you enter your account once your balance drops below zero. The overdraft fees often cost more than $ 30 and can cause small overdraft grows very quickly if several elements put your overdrawn account. The banks send email notifications when bills fall below zero, but legally, you, instead of your bank, you have a responsibility to monitor your account.
If you have overdraft protection in place in the form of a link to the deposit account or credit card , your bank will transfer money from that account to cover the overdraft on the day that your account falls below zero. If you have overdraft protection in place, the bank will loan you money in the form of a line of credit to cover your shortfall. In most states, you do not pay the debt if you can not pay within 30 days.
Your bank may place a freeze on your account on the day he enters negative. Your account will not be closed when the bank imposes a freeze, freezing simply prevents any transaction to post to your account until a deposit is made to resolve the situation discovered. A bank can maintain a 60-day freeze in several states before actually closing the account. However, most banks close accounts discovered after about a month.
For accounting purposes, the banks can not close accounts overdrawn, so that your bank has to use its own funds to credit money to your account and bring the account balance to zero before closing. When this happens, your bank does a “cancellation fee”, which means that your bank reclassified overdrawn bank account as a bad debt not expected to charge. However, even though the bank closes your account and cancel the charges still owe the bank money, and your bank can pursue the debt for as long as state law allows.