Making ends meet for many is not easy. They have to be measuring their expenses very well to have money in the account until they get paid. That's why, Sometimes it may happen that you have to pay something and you don't have money in the account. What happens at that moment? What happens if they give you a receipt and there is no money in the account?
That's what we want to talk to you about below so you can know what you're up to if you find yourself in this situation.
What happens if they give you a receipt and there is no money in the account?
The first thing you should know is that the situation you find yourself in when they pass a receipt and there is no money in the account is called "overdraft."
An account overdraft is the action that occurs when your account cannot satisfy the payment of that receipt or expense that is received. In other words, you do not have enough money (or any money at all) to be able to respond to the request for money they make of you.
When this happens, Your bank has two options:
- You can advance the money and deduct it once the money is in your account.
- You can return the receipt or not pay the expense, so what you have bought, that you have to pay because it is direct debit... you do not seem satisfied, which implies that you may face extra expenses such as interest.
What depends on whether your bank makes one decision or another? In general, from two aspects:
On the one hand, be a good customer. If your record has not been blemished, it is understandable that you might find yourself in that situation. And in that sense your bank can be benevolent and advance the money.
On the other hand, that you have warned. And if you talk to your bank telling them that they are going to send you a bill, that there will be an expense and you don't have enough money to pay it, they may accept it themselves and then deduct it from you. When you do not notify, the decision is made by them and many times their orders are to return what cannot be paid.
The extra money you will have to pay if they give you a receipt and there is no money in the account
When an "overdraft" situation occurs, you have already seen that your bank can advance you the money (which would put you in the red); or you can reject that payment.
In any case, you may be facing a series of commissions and interests that are:
- Debtor interest: These arise when the bank makes the decision to "loan" you the money to satisfy the bill they give you. However, this has consequences, and that is that you will have to return what the bank has lent you in addition to some interest. As a general rule, these are calculated by multiplying that negative balance by the number of days in which you are overdrawn. Also here we must take into account the borrowing interest rate that applies.
- Overdraft fee: Another payment that you will have to face is the commission for going overdraft. To calculate it, take the largest balance you have had within the settlement period and apply a percentage to it. The result cannot be an APR higher than 2,5 the legal interest on the money.
When the bank does not agree to advance you the money, what it does is reject all receipts. And that means that they will contact you to find out what happened and issue another receipt, but instead of for the original price, for a higher one (the original price plus interest for delay, for having to make the payment again... ) which involves a pinch that may not be pleasant to bear.
Why an overdraft can occur
That money is missing from an account is not something that needs to be explained to understand. There are many reasons why this can happen, from having no income (and not having more money in the account with which to cover expenses), to having an unforeseen charge or payment that reduces income.
Poor financial organization in controlling expenses is also a reason, sometimes the main one, for which the overdraft occurs, because the expenses are not well controlled with respect to the income one has. In other words, one lives above one's real possibilities.
What to do to avoid this situation
As you know, going short is not something you want to happen. Therefore, there are some tips to keep in mind to apply and remedy before that situation arises.
We tell you some of them:
Keep a record of expenses
It can be a manual or computer registration. The important thing is to collect all the expenses that must be faced and see if the income you have covers all of them. Ideally, there would always be more income than expenses, because it would mean monthly savings.
Have savings
Count on emergency funds helps deal with unforeseen expenses, as well as those planned that can be satisfied while the income is received. For example, paying health insurance even though payroll has been delayed.
This cushion can come from money you have at home, from money in the account or from other accounts you have (and with a deposit or money transfer you could solve the problem).
Have balance alerts
This is a service through which you can notify the bank to inform you when the balance reaches a certain amount in order to take action on the matter in case that happens.
Of course, find out beforehand whether this service is free or not to avoid further expenses.
As you can see, the situations if they give you a receipt and there is no money in the account are not beneficial for you at all, nor should you let something like that happen. Did you ever happened? How have you solved it? We read you in comments.