Kalibah

I am trying to help someone I know (honestly- it isnt me) decipher their financial problems. She has a check card... now the problem I am seeing is that she enters a negative balance in her checking account- but she does not have overdraft protection. If it is a direct withdrawl (NOT working like a credit card) and she lacks overdraft protection should the swipe not have been declined due to lack of funds?

The second question is a little more complicated because she is not being totally honest with me. On a day in feb she had 185 bucks in her account then Ameriloan takes out (electronic withdrawl) that, and money she doesn't have- resulting in a negative balance. What I don't understand is how money you don't have can be taken out of your checking account if you lack overdraft protection?

I didn't know she was using payday loans, there is no reason for her to be except her horrible spending habits, and im upset she didn't TELL me she was using them when she came to me with this problem... we were suppose to get to the bottem of this... but she only told me half the story. The rest I had to decipher from the horrendously long statements.


Any help would be appreciated- if this has been asked before - sorry.

NoSoup

As far a debit card not being declined, it depends on where you are trying to use it. For instance, if you are trying to withdraw funds from an ATM and the network is down, the machine is required to dispense the funds.

Additionally, many retailers have debit systems that allow you to swipe your card, but it does not instantly "freeze" the funds, nor withdraw them. In theory, you could use your card and go withdraw the money, causing it to bounce.

As far as going into the negative without overdraft protection - as you can see, it is possible. It is up to the financial institution to decide what they want to do, they can either "bounce" the check or they can allow the account to go into the negative - either way, they will likely charge overdraft fees.

Hope this helps

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

yotta

Most banks have "courtesy overdraft" which allows your account to be overdrawn into the negitive, though it will cost you out the ass to do so. With most banks this "service" is not optional, and you cannot opt out.

__________________
I am Jack's signature.

cyrnel

Aye. Recall that banks earn most of their money from service charges. It is not in their interest to warn customers or in any way prevent charges unless the bank is certain it'll be bad debt. It's up to customers to monitor their balances.

Might this help motivate your friend to stay above zero? She's hitting back by keeping her charges to an absolute minimum.

__________________
There are a vast number of people who are uninformed and heavily propagandized, but fundamentally decent. The propaganda that inundates them is effective when unchallenged, but much of it goes only skin deep. If they can be brought to raise questions and apply their decent instincts and basic intelligence, many people quickly escape the confines of the doctrinal system and are willing to do something to help others who are really suffering and oppressed." -Manufacturing Consent: Noam Chomsky and the Media, p. 195

credo

I was going to say the same thing, but since it was already said, I will affirm the opinion: Bank's love it when you overdraft, the would hardly prevent you from doing so. Overdraft protection only works to your advantage by pulling the money out of another account (savings) and having the bank only charge you, say, half the fee.

Lady Sage

I love it when people overdraft, they pay my salary! On the flip side I do counsel against it and try to get people to quit. While I like having them pay my salary, I do not like having them end up on ChexSystems and in collections. Very few banks will mess with people on Chex. Some banks even report them for a single overdraft which I believe is a farce, but its their business to run right?

Most places offer overdraft protaction and more and more banks are offering an opt-out for the negative debit card trannies. Reason they allow it is what if there was an emergency???? You would likely rather have the funds and the fee.

I would try and get her in to overspenders anonymous. (Hope it helps)

Lindy

I would bet that most--probably nearly all--overdrafts come not from emergencies, but simply lack of discipline. It is so easy to pull out the plastic and not write down the withdrawal. It's especially bad if you also write checks on the same account, when a check mailed off might take a couple of weeks to get back to your bank. You call the bank, and it tells you have $$$ balance, but the bank can't tell you that some of the kiddies are still out on the street.
I have a housemate --a professional woman with a Masters Degree who makes GOOD money-- who can't figure out how a checkbook works. When I started to help her she hadn't actually balanced her checkbook since she opened the account four years ago. In 2005 she paid over $1000 in overdraft fees. We had it all straightened out and balanced in February of this year, but in May I noticed a couple of those overdraft slips in the mail again. Her bank must love her, she has her paycheck on direct deposit, so the bank always gets its pound of flesh first. To to me this overdraft habit is like taking twenty dollar bills and running them through a shredder.
Lindy

Ample

A few months ago a few days before payday, I got my hair cut, the pooter at the shop said that I had enough cash in my account, but after adding the tip I went over.

BAM, hit with a 35 dollar charge on a 20 dollar hair cut.

I agree with Liby about the discipline vs. Emergency part. My case pure laziness, I have no promblems adding my checks in checking account ballance but never add ATM withdraws.

By the way, did you know that debits are really credits, and credits are really debits?

__________________

Her juju beads are so nice
She kissed my third cousin twice
Im the king of pomona