When you overdraw your checking account does that effect credit??
That is exactly what someone plugged into a search engine to get to my site!I love it - bad grammar and all. I often get some pretty weird ones like "sexy girl and boy in the closet" or "public restrooms in czech republic", and a handful that would make Ron Jeremy blush, but they're not all that random. I mean, my name has Sexy in it! And i recently wrote an article on paying to pee , so i can see how one might get here ;)
But it's not so much HOW people get to where they do, as much as it is a question of WHY they got there. Many people have questions on their minds that are just dying to be answered, and they can only hope their last click leads them to it. The top 2 that i frequently get are "average net worth" and "are political campaign donations tax deductible" (unless you add up all the "sexy.com's" i get).
Unfortunately i left the person who typed in "When you overdraw your checking account does that effect credit??" hangin' out in the wind. My post on overdrafting sure didn't answer his question (not that i could have seen it coming), but by golly that is un-f'ing-acceptible ;) So, i dedicate this post to you Buster!
The quick answer is Yes and No. While I'm no expert in the subject, I am led to believe that it really depends on the amount of time your account is left in the negative region, as well as the frequency of such happenings.
According to an Investopedia article:
"If you have bounce protection and don't bring your account back to good standing soon enough, you can bet that your credit score will take a hit. Also, if you use an overdraft line of credit or linked credit card, keep in mind the effects of having that extra money on your card."So if you overdraw once a year, let's say, and pump it back into the green after a few days, i seriously doubt the bank is going to report you to the credit agencies. But if, however, you continue doing so every other month and let it remain in the red for weeks (or months) on end, i'm afraid you'll be in some trouble...not to mention needing a little help with your money management skills.
I also found this little nugget while googling an answer myself, bringing me to a yahoo answers page (haha...i googled and landed on yahoo). Another grammar mistake with "your" vs "you're", but i'll let it slide ;) i really don't know why i'm noticing this stuff all of a sudden...
"your fine don't worry yourself, first off the bank will send you a letter, several actually until you bring your account back into the positive, this does not go onto your credit report unless you do not pay the overdraft and the bank fees, than they will close your account and charge you penanlties fees, send you few dozen more letters, and eventually after many many months they may actually report you to the credit bureau."I can probably dig up some more, and better, info on it, but i'm gonna side with these guys and go with my own feelings again that you're pretty much fine as long as you don't be stupid about it. I'd personally spend more time working on management and budgeting than trying to avoid credit blemishes. But hopefully this helps you whoever you were out there :)
Now, unto "how much is a $100 savings bond bought on april 27 1984 worth today"...you'd be amazed on how many variations of this one comes up.
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Remember, you can get a FREE credit report every year at annualcreditreport.com.
Labels: checking account, credit report, credit score, overdraft fees
posted by J. Money at
12:02 PM
7 Comments:
This was good info. I guess I just assumed that it wouldn't be reported on your credit report.
I went into the red a few times last month but got out within a day or 2. I'm not too concerned about my credit right now anyway, but it is a good thing to know.
Interesting post. I've got to admit I've never thought about it before. I don't like to ever use my overdraft because I feel like its just another way to be in debt.
The Yahoo! Answers answer you got was spot on. I used to work at a bank and close overdrawn accounts--but I didn't even see them until they'd been negative for 45 business days. Then, I'd send them a letter and 10 business days later, I'd charge off their account, report them to Chex Systems, and send them to our Collections department. THAT'S when you start getting into the credit issues.
i've also gone into the red a cple times last month, but unfortunately it was out of my control (our paychecks bounced. twice.). i changed things around a bit like padding my checking with my savings just enough to avoid it in the future, but it sucks either way.
So that's great james that the Yahoo answers one was correct - thanks for the inside scoop! I'm pretty sure the other banks follow suit, even if the time is restricted a bit more with the credit crunch and all.
There's nothing that sucks more than having to pay overdraft fees when you accidentally overdraw your checking account. I remember one time my car broke down. I had to pay with a check and wasn't sure if my check would clear in time. I found out that you can get a payday loan and borrow money from your next payday to cover the check. They deposit the cash advance in your bank account the next day. The check for my car repair cleared because I had the extra money in the bank. Anyway, I used MyLoansUSA and they made it really easy. Best of all, I didn't overdraw my account or have to pay fees. YEAH!
I was under the impression that it didn't impact your credit rating. I guess I need to stop using overdraft really quickly! Thanks for the information.
james is right! the account has to be closed and sent to collections before the credit issues come up.
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