In our busy lives, it's easy to make a mistake while keeping track of finances. There may be a bill you should have remembered or a recurring charge you missed, and before you know it, the account is overdrawn. But here's the good news - with overdraft protection, you can opt-in to have the difference paid and not returned, providing a safety net for those unexpected situations.
Overdraft protection will cover the difference between the amount in the account and the amount coming out. The type of account will determine the amount that the Bank will cover in overdraft charges. Whether a charge is paid or returned, overdraft charges are subject to fees per transaction. The best practice would be to make the account current as soon as possible, but there are times when that is not possible, and the account continues to have a negative balance.
Charged-off Account Defined
A charged-off account occurs when an account has been overdrawn for a certain period of time and closed with a negative balance. Each bank may have varying lengths of time for an account to be overdrawn before being charged off. Charged-off accounts may make the account holder unable to open new accounts at other institutions.
Ways to Avoid a Charged-off Account
The best way to avoid a charged-off account is to take responsibility for your finances and make sure your account stays positive. But in a pinch, there are some products that can help with overdrafts. By maintaining a positive balance, you can avoid the stress and potential consequences of an overdrawn account. Some helpful products include:
Savings Account
Linking a savings account to your checking account as a backup is a great way to make sure you don’t get caught with a negative balance. The Bank can set up what is called a “sweep” account that will use the funds in your savings account to cover expenses such as a large unexpected bill or a high-value purchase that goes over the limit of your checking account.
Overdraft Line of Credit
Another product that a customer can use to avoid overdrawing their account is an overdraft line of credit or an ODL. This is a credit product that a customer would need to apply for and be approved. To apply, you would need to fill out an application form, provide necessary documentation, and meet certain credit criteria. Once approved, the ODL can be attached to your checking account and will cover the extra charges if the account should overdraw.
Online Banking
Online banking is not just a great way to keep an eye on your funds day to day, it's a powerful tool that puts you in control of your finances. Within online banking, you can transfer funds between your Bar Harbor Bank & Trust accounts, making it easy to catch low funds in the account before it can be overdrawn. This level of control can help you avoid overdrawing the account and stay on top of your financial health.
For more information, visit the Savings Accounts, Overdraft Protection, and Online Banking pages on our website.
Have questions or need assistance?
If you have questions about this topic or need assistance with your banking needs, please speak to one of our knowledgeable staff at your local Bar Harbor Bank & Trust branch. We’re here to help you build a solid financial future.
