Overdrafting

It is extremely important that all individuals who open a bank account understand the concept of overdrafting and what consequences may result from this act. An overdraft happens when the owner of a bank account withdraws more money than is actually in it, thus resulting in a negative account balance. Overdrafts can happen as a result of any of the following actions:

• ATM overdraft
• Check overdraft
• Debit card overdraft
• Automatic payment overdraft

Always balance your checkbook, be aware of the current amount in your account, and remember all automatic payments you have set up. If you do this, you should be able to easily protect yourself from overdrafting your account.

Overdraft Agreements

Overdraft agreements are credit agreements pertaining to an individual’s bank account. Those who set up these agreements are allowed to have a negative bank account, up to a certain limit (essentially, they are allowed a certain, set amount of credit). These are typically used by those who are just recovering from bankruptcy and are struggling to repay loans. People who successfully operate within the limits of their overdraft agreements can improve their credit scores.

Contact Us

Too many overdrafts have the potential to leave one with unmanageable fees and a ruined credit rating. It is vital that bank account owners familiarize themselves with their banking institution’s rules and regulations regarding overdrafting. If you would like to learn more about this financial threat, please call the Austin bankruptcy attorneys of Slater, Kennon & Pugh Ltd.LLP today at 512-338-1100 to speak with one of our qualified lawyers about your situation.