If your payments and purchases are more than the available balance in your checking account, your transactions may be declined or returned and your account may have a negative balance. While the solution is simple -- don’t withdraw more money than you have – today’s checking accounts allow you more ways to access your account than ever before. In addition to checks, you can use a debit card to make everyday purchases or withdraw money from an ATM. You can pay your bills by authorizing a company to automatically deduct money from your account on the due date or use an online bill payment to send the money.

Understanding how these payment methods differ can help you avoid overspending. Depending on the type of payment or purchase method you use, the time it takes for the transaction to be paid from your account can be different.

Some payment options let you define exactly when a payment will occur.

For example, if you use Online Bill Pay, you can choose the exact date when funds will be withdrawn from your account to settle a bill. Or, if you authorize a company to make recurring automatic payments from your account (for example an insurance payment or gym membership fee); the company tells you the exact date when these payments will be sent to the bank.

Other payment options have more timing uncertainty.

If you write a check to a friend, she may cash it immediately or set it aside for several weeks before depositing it. When you use your debit card at the local store, the merchant will immediately request authorization for the purchase to make sure you have enough money in your bank account at that time. When the bank approves the transactions, we guarantee the merchant that the transaction will be paid from your account. However, it may be several days before the merchant actually settles the final purchase amount with the bank and the funds are withdrawn from your account.

When tracking your account, you should make note of any outstanding obligations in your transaction register. Automatic payments are convenient for avoiding late payments, but can also make it easy for you to forget that you have an outstanding obligation. If you have authorized a company to make automatic payments from your account, make sure that you know the exact date they will occur and make note of it in your transaction register.

Understanding your available balance

At Wells Fargo, you can find your checking account’s available balance online, at the ATM, or through your mobile device. This is the most current record we have of the money available to withdraw from your account or for the authorization of your next debit card purchase. However, your available balance includes only the authorized or pending payments that Wells Fargo knows about. You may have authorized transactions that will make the amount truly available for your next purchase lower than what is known to us.


Transaction Type
When the bank knows
When you know
Checks
The amount is known only when presented for payment
When you write the check and record it in your check register
ATM
The amount is known at withdrawal
When you select the amount at the time of withdrawal
Online Bill Pay
The amount will be deducted from your account on the “send on” date you specify
When you specify the amount and payment date in scheduling your bill payment online
One-time point-of-sale debit card
The authorized amount is known at point-of-sale. Final amount known only when merchant submits the transaction for payment, typically with one to three days
When you see the final amount at the point-of-sale
Preauthorized automatic debits
The amount is known only when presented for payment
When the final amount, payment method, and debit date is scheduled

Write it down

What is the one of the best ways to avoid having a negative balance or an overdraft? Write it down.

Know all the outstanding obligations you have and consistently write them down in your own personal transaction register. It doesn’t matter whether you use an online tracking tool or a paper-based register. What does matter is that you faithfully record every deposit, withdrawal, and purchase in your register and keep a current, accurate record of the money you truly have available. Always consult your personal transaction record before making your next purchase or withdrawal.

Additional tips to avoid overdrafts

Keep a cushion in your account to cover payments that you may have forgotten to record in your personal transaction register. You can also setup alerts to notify you by email or text when your balance goes below an amount you specify. Also consider using mobile apps or text banking to monitor your balance while you’re on-the-go.

Finally, in addition to all of these tips, you might consider using overdraft protection services. For example, at Wells Fargo, when you link an eligible savings or credit card account to your checking account, money can be automatically transferred if you don’t have enough money in your checking account to cover a transaction. A single, overdraft protection transfer fee will be assessed regardless of how many transactions are presented for payment that day.

Additional things to keep in mind:

  • If you use your debit card to authorize an online purchase, be aware if the merchant notifies you that an item is on back-order. If so, the debit card you provide will not be charged until the item ships. This may be weeks later when you have forgotten about the purchase. Make a note of this purchase in your transaction register at the time of purchase.
  • Using an online bill payment service may help you keep track of your payments. Rather than authorizing a company to “pull” money from your account on the due date, you “push” the money from your checking account and can determine if you have enough money before sending the payment.
  • Wells Fargo offers services, such as online and mobile banking and text alerts, that help you monitor your available balance. Keep in mind that your available balance does not include transactions that we don’t know about yet, for example checks you have just written or the car payment you just authorized. Only you know all the transactions that will affect the balance you have available for making that next payment.

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