Overdrafts and negative balances: What's allowed?

copperstag95 said:I was just sitting here wondering, though I might be overthinking things, if it’s actually possible for a checking account to go into the negative...

no

Just checking in to let you know they lowered my overdraft limit for $400 🙂 😁
. It’s been in effect since April 5th.
The reason? I can't point to a single thing. My income is identical to the last billing cycle, I haven't gone into the red, and honestly, most of the time I'm not even hovering near a negative balance.
🤷

Robin Rodriguez5 said:Just checking in to let you know they lowered my overdraft limit for $400 🙂 😁
. It’s been in effect since April 5th.
The reason? I can't point to a single thing. My income is identical to the last billing cycle, I haven't gone into the red, and honestly, most of the time I'm not even hovering near a negative balance.
🤷

Isn't not using your overdraft exactly why banks end up cutting your limit?

So, Chase just bumped up my overdraft limit, which is pretty wild considering I haven't touched it in about two years. My income has seen a bit of an uptick lately, so I’m assuming that’s what triggered the change. But from what I can tell, they aren't actually cutting limits just because someone isn't using them... if that's the case for me, at least.

My husband’s overdraft limit was slashed because his employer hasn't actually deposited a paycheck in three months. Now the government is wondering how we're even staying afloat. It’s a bit ironic, isn't it?
I have a question. My negative balance was cleared about ten months ago—it was a mess involving some legal drama with a local firm in Chicago, but I’d rather not relive that headache. I bank with Bank of America now. Since the account has been clean for six months and I've been at my current job for nearly a year with steady direct deposits, I'm wondering if I'll be eligible for an overdraft line again.

So, I’ve been staring at Wells Fargo's stock and thinking—it might actually make sense for my current mess. Right now, I'm sitting in an overdraft of $5000 over at Bank of America. The interest rate on that overdraft is a brutal 13.49%, whereas Wells Fargo is offering a loan to clear the debt at just 9.45%. If I pull the trigger, I could also wipe out my revolving credit card debt and that annoying little balance hanging over me—the one that costs me $20 every single month just for the service package. Honestly, I’d be better off if I didn't have to pay $4.00 just to keep my checking account and online banking active. Plus, they’re throwing in a 2.5% interest rate on positive balances. What do you guys think? Is this a smart move or am I dreaming?

David Jackson4 said:And you guys honestly think he just discovered fire or something? Not really. It's just that smart people—or folks who actually understand how an overdraft works—tend to handle things before they spiral out of control. They don't treat walking into a branch like visiting a slaughterhouse once they're already deep in the red and it might be too late. At the end of the day, the bank didn't put them in that spot; they did that to themselves.
Just to be clear, we're talking about banks that don't just lower your credit limit on their own whim.

sorry, I just couldn't help myself...

Madonna:

...they don't suddenly start treating the bank like it's a crime scene once they're already underwater and it might be too late. The bank didn't drag them into this mess... they did it to themselves.

I wouldn't generalize that easily. A lot of smart people are just totally out of the loop or don't care about their statements and options while everything is fine. Even after the fact, some people act too proud, others are just too embarrassed to ask questions.

Anyone can find themselves stuck, and most people have no clue they can even negotiate. Plus, if you're lucky enough to actually go in to ask, you might run into a teller who has no idea what's going on or just isn't in the mood to help, and then you're screwed... so I think it's good this was posted here.

Madonna:

Just to clear things up, we're talking about banks that aren't voluntarily lowering their overdraft limits.

I can't speak for every bank out there. I've had an overdraft at Bank of America and now at Bank of America, so I know how my fees are calculated. I know what's in my account and I can figure out exactly what my overdraft will look like. If it's being calculated according to the contract between me and the bank, that's not "voluntary"... to me, voluntary would be them hiking up interest rates on loans, even if they claim they're just following market trends.

vividcanyon37 said:So, I was just on the phone with a customer service rep from JP Morgan Chase today. I've been using my overdraft, and looking at my statement, it looks like they're slashing my limit by an amount larger than my actual monthly paycheck (about $500)! The guy explained how they calculate the overdraft limit—they take my last three paychecks, average them out, and then multiply that average by two (since I’m on their Balance package). But here's the kicker: back in November, I got some backdated child benefit payments, and because of some weird internal logic, they counted that as regular income. That bumped up my "average" salary, which inflated my overdraft limit. I'm such an idiot—I didn't bother checking the fine print when I switched packages, so I thought I had a standard three-month cushion. I was absolutely floored when I realized my entire next paycheck is basically gone just to cover this hole, and I'll still be short. Now I'm stuck playing musical chairs with my money—moving funds around and pulling from my credit card just to stay afloat. And get this: did you guys know the interest rate on overdrafts at JP Morgan Chase is 13.49%? I honestly thought it was way lower. My credit card is at 12.99%, but then they hit you with a 3% transaction fee. I really need to ditch these cards. When you're backed into a corner, you start grasping at straws, but seriously, what is the point of working just to hand it all over to the bank? I'm looking at my statement right now—$12 in interest, $20 for account maintenance fees, and it just keeps piling up month after month. If I do the math, I'm basically handing the bank half a paycheck every year...🤷

There was actually an article in the Evening News about this today. Most major banks have similar rates for overdrafts. You're in a tough spot... maybe try heading down to the branch and see if there's any way to phase out the reduction instead of all at once?

silentowl9 said:sorry, I just couldn't help myself...

Madonna:

...they don't suddenly start treating the bank like it's a crime scene once they're already underwater and it might be too late. The bank didn't drag them into this mess... they did it to themselves.

I wouldn't generalize that easily. A lot of smart people are just totally out of the loop or don't care about their statements and options while everything is fine. Even after the fact, some people act too proud, others are just too embarrassed to ask questions.

Anyone can find themselves stuck, and most people have no clue they can even negotiate. Plus, if you're lucky enough to actually go in to ask, you might run into a teller who has no idea what's going on or just isn't in the mood to help, and then you're screwed... so I think it's good this was posted here.

Madonna:

Just to clear things up, we're talking about banks that aren't voluntarily lowering their overdraft limits.

I can't speak for every bank out there. I've had an overdraft at Bank of America and now at Bank of America, so I know how my fees are calculated. I know what's in my account and I can figure out exactly what my overdraft will look like. If it's being calculated according to the contract between me and the bank, that's not "voluntary"... to me, voluntary would be them hiking up interest rates on loans, even if they claim they're just following market trends.

So, how does that calculation actually work? What’s the specific formula? You mention it's all agreed upon in the contract, but in all my time dealing with these institutions, I have yet to see a single variable rate agreement that actually spells out a clear formula.

vividcanyon37 said:So, I’ve been staring at Wells Fargo's stock and thinking—it might actually make sense for my current mess. Right now, I'm sitting in an overdraft of $5000 over at Bank of America. The interest rate on that overdraft is a brutal 13.49%, whereas Wells Fargo is offering a loan to clear the debt at just 9.45%. If I pull the trigger, I could also wipe out my revolving credit card debt and that annoying little balance hanging over me—the one that costs me $20 every single month just for the service package. Honestly, I’d be better off if I didn't have to pay $4.00 just to keep my checking account and online banking active. Plus, they’re throwing in a 2.5% interest rate on positive balances. What do you guys think? Is this a smart move or am I dreaming?

The rate is 9.90%, but don't forget the processing fees and those insurance policies they tack on. It’s a decent move if you can actually stay out of the red this time. Not sure though... let the experts weigh in...

Nicholas Turner said:So, how does that calculation actually work? What’s the specific formula? You mention it's all agreed upon in the contract, but in all my time dealing with these institutions, I have yet to see a single variable rate agreement that actually spells out a clear formula.

Look, you sign the benefits package, right? And if that package puts you down by two paychecks, they just take the average of your last three months of pay. So, you take February, March, and April, add them up, divide by three to get the average... then just double that number to find the deficit for the package. Seems pretty straightforward to me...

The moment you mention a bundle, it’s always going to be about JPMorgan Chase—they really have their own way of doing things. 🙂 Personally, I’m sitting on an overdraft roughly equal to five of my paychecks—and even though nothing has changed with the dollar in over a year, I don't even use that feature! There isn't a single thing in my contract explaining how they calculate this deficit. Interestingly enough, a colleague of mine is running a deficit of seven paychecks. Nobody seems to have a clue how or why this happens, so I was curious if there might be some universal formula at play here—but clearly, it’s a case-by-case situation.

Nicholas Turner said:The moment you mention a bundle, it’s always going to be about JPMorgan Chase—they really have their own way of doing things. 🙂 Personally, I’m sitting on an overdraft roughly equal to five of my paychecks—and even though nothing has changed with the dollar in over a year, I don't even use that feature! There isn't a single thing in my contract explaining how they calculate this deficit. Interestingly enough, a colleague of mine is running a deficit of seven paychecks. Nobody seems to have a clue how or why this happens, so I was curious if there might be some universal formula at play here—but clearly, it’s a case-by-case situation.

I was just about to sit down and watch some TV...
No, I don't use Chase, I'm with Bank of America. I used to have one of those bundles, but now I just have a basic checking account with overdraft protection. You can see the description on their website here http://www.bankofamerica.com/personal/banking/...1/Default.aspx
I've never had a Chase account, but I've heard from others that they have a very specific way of calculating overdrafts. So specific, in fact, that even the people working there don't seem to grasp it...

I just checked the Chase website. It only mentions a maximum amount, so it's probably just handled individually...

Can I ask something?

Which bank would you guys recommend for direct deposit if I need a few specific things: they let you go into overdraft regardless of whether you have a permanent job contract or not, and you can actually buy certain things in installments using just a standard debit card?

The reason I’m asking is because I swore an oath to myself that I wouldn’t touch a Visa Classic or any other credit card ever again... I spent years paying off debt from mistakes I made way back when... but I'm finally in the clear now, so I'm looking for a bank that offers this kind of flexibility without the full-blown credit card hassle.

Thanks👍

In that case, it’s essentially the same thing. It isn't really about what you call the product; it's about how you actually use it.

Regarding your question, I honestly can't think of a single one. But isn't that precisely the point? A debit card is designed for immediate payment, whereas a credit card provides a line of credit and allows for installments. That is the very definition of the two. To ask for a debit card with installment options is functionally identical to asking for a credit card.

As far as I know, both Chase and Bank of America offer a Spotify-style installment plan for debit cards, so you can basically buy things on credit through them!

Nicholas Turner said:The moment you mention a bundle, it’s always going to be about JPMorgan Chase—they really have their own way of doing things. 🙂 Personally, I’m sitting on an overdraft roughly equal to five of my paychecks—and even though nothing has changed with the dollar in over a year, I don't even use that feature! There isn't a single thing in my contract explaining how they calculate this deficit. Interestingly enough, a colleague of mine is running a deficit of seven paychecks. Nobody seems to have a clue how or why this happens, so I was curious if there might be some universal formula at play here—but clearly, it’s a case-by-case situation.

Under my new setup, I've got an authorized overdraft of exactly one paycheck. 🙂
Maybe I'm paying for being stubborn and sticking with my old Premium account instead of opting into that "bundle of perks" they offered. 😬

Robin Rodriguez5 said:Under my new setup, I've got an authorized overdraft of exactly one paycheck. 🙂
Maybe I'm paying for being stubborn and sticking with my old Premium account instead of opting into that "bundle of perks" they offered. 😬

The Premium model has a much higher ceiling for overdraft limits $5000 😍 (if you can call drawing conclusions 😍 an activity) 🤣

Can anyone give me some insight here? I’m wondering what my odds are of getting approved for an overdraft if I’ve been with my bank for about a year. My salary is around $4,500 a month, but back when I was ten months in, Chase slapped me with a blacklist entry that stayed on my record much longer than it should have—they won't even talk to me about it anymore.
So, in four months, it'll be six months since that flag was cleared, and throughout this entire period, I've had a steady income with my full $4,500 hitting my account every single month.
What are my realistic chances?
I haven't had any issues with them since starting; no bounced checks, no unauthorized overdrafts, nothing.

Steven Reed said:The Premium model has a much higher ceiling for overdraft limits $5000 😍 (if you can call drawing conclusions 😍 an activity) 🤣

Basically, they let you go into the red by up to one full paycheck, with a hard cap at $5000. So, if you’re pulling in $5,000 a month, your overdraft limit is roughly $1667.

🤷