How To Overdraft a Debit Card On Purpose For Extra Funds?

I have always been a fan of debit card payments and transfers. They are quick, safe and easy to do. You would agree, right? However, things can take an ugly turn if you do not know how to overdraft a debit card on purpose and end up with negative balance in bank account without you knowing!

Can You Overdraft a Debit Card Intentionally?

You can overdraft debit card once you have activated debit card overdraft protection service.

Overdraft protection means you will be allowed to use the card to make purchases or payment when you don’t have sufficient funds in your checking account. In such cases, bank will pay on your behalf so the transaction is not turned down but you will eventually have to pay the money back to the bank.

The process is somewhat the same whether you overdraft with debit card at a store or with an ATM. You will be able to overdraw within the limits set by your bank. Moreover, the bank may charge you a small fee for overdrafting.

Note! We would recommend that you return your account balance to positive as soon as possible after overdrafting. Otherwise, you will incur penalties or additional fees.

The overdraft fee is typically $35 for majority of the banks. This means if you purchase an item of $30 but need to overdraft the debit card for completing the purchase, the total cost will be $65.

Can You Withdraw Money From Account With a Negative Balance?

You can overdraft a debit card when there are insufficient funds so a portion of the payment results in negative balance in your account. But, the next question is: Can you overdraw when there is already an amount which you need to pay back?

With overdraft protection, you can do it! The bank will allow you to take out money from bank account where the balance is already negative and adjust it in the next paycheck.

This is an extremely useful feature when you just can’t avoid purchase of necessities like grocery, gas at the station, prescribed medicines, etc.

Why Do Overdrafts on Debit Cards Happen?

There are many events that can result in overdrafting of a debit card unintentionally. Most of us are busy in our lives and hardly keep a check on current bank balance.

A simple way to protect yourself against overdraft is to opt out of the service altogether. Then the debit card transactions will be declined when it is used to make a transfer that exceeds the available funds in the bank account. Otherwise, even a small purchase can result in debit card overdraft.

The list may be longer than this but following are some of the most common debit card overdraft situations you may find yourself in.

1. Careless Purchases

You can overdraft a debit card on purpose but if you are careless with purchases and have signed up with overdraft protection, your account can go into negative without your permission.

Paper money and checks used to be better in this regard as they gave a clearer idea about how much was left in your wallet to spend. This is not the case when spending via debit card or credit card.

To track your purchases and remaining amount, you will need to log in your online account and view statement from time to time.

An alternative is to calculate your balance after every purchase that you make through the debit card. This may help ensure you do not spend more than you have in the bank. As easy it may sound, the lengthy calculations can get confusing sometimes resulting in unintentional overdrafts.

If you don’t want any surprises, download tracking apps like Mint, You Need a Budget, or Good Budget to help monitor your spending and stay on top of account balance at all times.

2. Outdated Information

This is an experience that I have had personally! Debit card purchases or transactions are typically updated immediately in your bank account history when the funds are deducted but that is not always the case and I found that out the hard way.

I went on a shopping spree, had to fill card tank on the way, and stopped to get a take-away from my favorite restaurant.

Later on I realized that I had overdrafted my debit card and my account balance was showing in negative.

This happened because I kept spending through the card without tracking the purchases. At the same time, the bank had not updated all the expenditure as it was happening. When the system finally accounted for spending, it left me with a considerable amount to pay back to the bank.

This is not as uncommon as it may sound. Banks sometimes update online information or the banking app with a delay resulting in a miscalculation if you were not keep enough to take your own spendings.

3. Pending Authorizations

Hotels and gas stations are common places where you must watch out for pending authorizations.

If you are not aware of the common terminologies of banking systems, you may not know what a pending authorization is so I will explain this to you in simpler words.

Let’s say you overdraft a debit card at a gas pump. Even when you opt for gas worth $5 only, the card will debit up to $70 because that is the cost to fuel the biggest gas tank typically. The vendor will deduct $5 only and the rest of the balance will be credited to your account. However, you will have already overdrafted the account with $70. This is other than $35 overdraft fee that will be imposed additionally.

4. Scheduled Purchases

A majority of mobile banking apps allow users to schedule recurring payments. In this way, you don’t have to worry about missing out on an important payment like insurance charges, medical bills, electricity bills, gym membership fees, or monthly charges for a streaming service.

Now, what will happen if you have set up automated billing for any of these but do not have funds in the account to cater to them when the date arrives? It will overdraw your account!

It helps to choose the date of charges withdrawal as most of the services offer. But sometimes, due to a holiday or late delivery of pay-check, overdraft can occur without prior notification. Moreover, some payments can also be claimed by the companies 4 days earlier.

How To Avoid Overdrafting Your Debit Card?

There are some straight-away answers to this question. You can begin by keeping a regular check on your balance and ensure you are always spending within the limits. You should also opt out of overdraft protection so that debit card transactions are automatically declined when the payment exceeds the available funds.

But, what if you are desperately in need of the money but don’t want to consider overdrafting your debit card? I have been through some similar situations so I understand that life can get tough sometimes!

If cash for emergency spending is what you need, there are plenty of apps and online platforms that can help you obtain the extra funds.

1. Chime

Chime is one of the most reliable cash advance app that offers short term loan of up to $200. So you don’t need to overdraft your debit card for small purchases like getting a meal or buying a new phone.

Moreover, Chime loan/overdrafts are fee-free unlike debit card overdrafts.

If you are a new Chime user, the overdraft limit may be set at $20 only but it will increase overtime if you are responsible with on-time payments.

You will need to sign up with SpotMe feature to access the loan offer. It is easy and quick to do so. There are also fees for activating SpotMe on your Chime account

Now we get to the tricky part! Although Chime overdrafts do not have a strict eligibility criteria, you need to be receiving a direct deposit of $200 or more a month as Chime takes it as a security to cover overdrafts on your account.

2. PockBox

An alternative to overdrafting your debit card is to download and use cash advance app like PockBox. This platform is straightforward to use. You can apply for a cash advance here by providing just a little personal information.

The PockBox will then connect you with most suitable lenders. You can get up to $2,500 of loan within minutes.

The approval can take a while but its worth the wait. What you need to watch out for is the interest rates that short-term, instant loan options have. Although they provide funds quickly, the fees can be outrageous in some cases.

Moreover, PockBox reports to credit bureaus. So, if you are late with payments, it can have an adverse affect on your credit score and even make it difficult to apply for a cash advance or loan in the future.

Why Should You Opt For Overdraft Protection?

When you allow for overdraft, your account will go into negative but the purchase will never be turned down. This is quite helpful when you need to buy something important and do not have time to apply for a cash advance or wait for loan approval.

Overdrafts are now possible with minimal fees.

Moreover, with overdraft protection, there will be no added cost of a returned check to the retailer. Overdraft will also save you from paying any late fees to the person or merchant you are buying from.

Why You Should Not Allow an Overdraft?

If you do not have have overdraft protection, the purchase will be turned down and you will get a “declined” message which can be quite embarrassing.

It goes without saying that you will not be able to carry out any transactions once the account balance reaches zero. Checks written on your account will also be returned and on top of that, returned check fees will be charged to your bank account as well.

Before You Go!

You can overdraw a debit card if you have activated overdraft protection but I would not encourage to do so given the cost of overdraft fees that can amount up to a lot. Alternatively, cash advance apps like Chime, Earning or Dave are a better solution if you are need of extra funds before the payday.

In addition to the alternatives that I have discussed above, you can also consider looking into ATMs that let you overdraft or Cash app overdraft if you happen to be using this application. Don’t leave without reading my simplest guides on how these overdrafts work!