How long do I have to pay an overdraft?

If you find yourself at the point where you should pay a bank overdraft, that is, when you have more obligations with your bank account than money in it, your bank has several options. You can repay those unpaid obligations, so You will probably be charged a fee for not having enough funds. You can also pay the creditor as requested, leaving your bank account balance negative. When this happens, you are charged an overdraft fee. If you don’t pay this fee promptly and your account remains in the red, the bank has the option to close your account. However, if in this situation you contact your bank immediately, the bank may be willing to work with you.

read the contract

The typical contract that consumers must sign before opening a bank account spells out the different circumstances in which it can be closed. Banks usually reserve the right to close an account at any time after giving a specified period of time by oral or written notice, this period is normally five to seven days.

However, for accounts with a negative balance, banks are not legally required to give advance notice if they believe closing the account is necessary to protect themselves from risk or loss.

The time to pay a bank overdraft varies

The policy established by each bank for overdraft cases will determine the time it takes to close negative accounts, this will also depend on the amount of the negative balance of said account and the client’s banking history. This is where banking loyalty works in your favor. Many banks typically wait 30 to 60 days before closing an account, while others may wait four months.. The long period occurs because the bank’s analysts prefer that you bring the account up to date rather than close it. In case of closing the account, the bank will cancel the debt and record it as a loss in its books.

Immediate action

Regardless of the bank’s general policy, an account that is overdrawn by a large amount of money on a regular basis may be considered by the bank to be too great a risk that no warning may be given before closing the account. . What’s more, when a bank believes the overdraft is the result of fraud, such as when a series of bad checks are deposited from a closed account and then returned, the account may be closed immediately. Also, you can close an overdraft account yourself by contacting the bank and making that request.

The obligation does not disappear

The fact that an overdrawn account is closed by you or by the institution does not mean the end of your obligation to respond for the negative balance.

Banks report overdrawn and unpaid accounts to consumer data services like ChexSystems, which give each customer a score in terms of bank reliability as do the three major credit bureaus for creditworthiness. Because banks use these databases to assess each customer’s banking history, negative information in these databases makes it less likely that you will be able to get another bank account later.

Correct the reports

After paying an overdraft, banks must update information in both ChexSystems and other databases to indicate that you have paid off your obligation, even if they don’t erase the reason the account was closed. However, banks do not always do this. You can get a free copy of your ChexSystems report each year by contacting that company. You can also receive a free copy when the information in that database results in you being denied a banking benefit or procedure.

Read the report carefully and follow the indicated procedures in case you do not agree with the information shown. The information given by the banks and included in your report usually expires in a period of five to seven years, but keep in mind that if you do not pay the outstanding balance, you will not be able to open a new bank account during this time.

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