When a charge hits a person's bank account and there are not enough funds to cover it, the bank may refuse the charge or allow the account to go into a negative balance, explains Balance. For each transaction that overdraws the account, a fee is usually applied, states Forbes.Continue Reading
Many banks allow the customer to overdraw his account as long as he is in good standing, according to U.S. Bank. If a bank receives multiple overdrawn charges per day, it may rank those charges in order from largest to smallest so the customer can pay his most important bills before he hits the overdraft limit, notes Forbes.
Customers can avoid overdraft fees by applying for an overdraft protection, or a savings account or line of credit that can be used to cover the items that would otherwise be overdrawn, explains U.S. Bank. A bank may also allow a customer to opt out of overdrafts entirely and simply refuse any item that would bring the customer's account to negative.Learn more about Bank Accounts