Can You Overdraft More Than Once?

INTRODUCTION

At some point in our lives, we tend to run out of cash while buying things. To avoid embarrassment, we desire immediate cash. An overdraft has been made available for those who find themselves in such situations. One can apply for an overdraft online or physically. In this article, we will see about ‘Can You Overdraft More Than Once?’.

Can You Overdraft More Than Once?

Depending on the bank, you can Overdraft more than once a day. Some banks only allow their customers to overdraft just once, while some allow them to Overdraft more than once, but with a fee attached to every item. An overdraft can incur overdraft fees, it could be multiple fees depending on how many times you overdraft in a day. Having answered the question of whether one can overdraft more than once, we will take a look at what overdraft means.

What Does It Mean To Overdraft?

An overdraft is a line of credit provided by a bank to a customer, allowing them to write cheques for more than the actual amount on the account with a finance charge added in the excess.

it is usually in the form of a loan, hence it attracts interest when a customer has overdrawn the account. 

Benefits and Advantages of an Overdraft:

1. When a customer is stranded on cash, overdrafts give you immediate access to extra money.
2. With overdrafts, banks will only charge you for what you use.
3. An overdraft can be used as a backup in emergencies.
4. It is very easy to arrange for it.
5. An overdraft is more convenient when it is compared to long-term loans.

Disadvantages of an Overdraft:

1. If a customer exceeds it limit or overdraws the account, the bank will charge a fee.
2. The charges attached to it can be very high.
3. Customers mostly get overdrafts from banks which they hold a current account with.
4. Banks can reduce a customer’s it limit anytime they desire.

Factors Banks Consider Before Allowing A Customer To Overdraft

1. Banks will take into consideration the credit history of the customer requesting it.
2. Banks will put into consideration the Age of the Customer’s account. Banks may not allow it if the account is New, although few banks allow it.
3. Banks put into consideration the linked account of the customer.
4. Banks also put into consideration the customer’s average balance.

Types Of Overdrafts

  There are two types of overdrafts which are: The Arranged Overdrafts, and the Unarranged overdrafts.

1. Arranged Overdrafts:

Arranged overdrafts can also be called authorized overdrafts. With authorized overdrafts, a customer can make arrangements with their banks, agreeing on the borrowing limits. It is not just the bank imposing a limit, it is both the bank and the customer agreeing on the limit. 

2. Unarranged Overdrafts:

These overdrafts are also called unauthorized overdrafts. With unarranged overdrafts, there is no agreement whatsoever between a customer and the bank on the amounts that will be spent. No limit is known to the customer, leading to the customer spending more than the remaining balance. 

It is important to note that once a customer exceeds it limit, charges are incurred.

What is an Overdraft Limit?

Overdrafts are open credits that can be used by a customer repeatedly until it limit set by the bank by specific instructions is reached. it limit is the maximum amount that a customer is allowed to withdraw. This simply means that a customer cannot withdraw added money once the payments exceed the limit, else it incurs interest.

Most banks add interest fees, and another fee, like a monthly fee once a customer exceeds the limit. You just have to find a good bank that has good it limits and fees. Some of these banks will be discussed here.

Banks That Allows Customers to Overdraft More Than Once

1. Bank of America: The Bank of America allows its users with a limit of four(4) overdrafts in a day. The bank deducts an overdraft fee of 35 dollars per item.
2. Wells Fargo: Wells Fargo allows its users to it with a limit of three(3) overdrafts in a day. the fee is 35 dollars per item.
3. Sub trust bank: Suntrust bank allows its users to it with a limit of six (6) overdrafts in a day. the fee is 36 dollars per item.
4. PNC Bank: PNC Bank allows its users to it with a limit of four (4) overdrafts in a day. The fee is 36 dollars per item.
5. BB&T Bank: BB&T bank allows its users to it with a limit of six(6) overdrafts in a day. The fee is 36 dollars per item.
6. Chase Bank: Chase Bank allows its users to overdraft with a limit of three(3) overdrafts in a day. the fee is 34 dollars per item.

Banks That Charges No Overdraft Fee

1. Capital one 360.
2. Ally Bank.
3. Axos Bank Rewards Checking.
4. Betterment Checking.
5. Discover Cashback Debit Account.

What Happens If a Customer is Unable to Pay an Overdraft?

It is rare for this to happen as banks consider some factors before extending an overdraft to a customer. In cases where it happens, here are some actions the bank carries out:

1. The bank could shut your account.
2. The bank could raise a case, and take legal actions against you.

CONCLUSIONS

it has its advantages and it has some disadvantages. One of the disadvantages is the high charge fee. Some banks in the United States are working on slashing the overdraft fee. Examples of such banks are Wells Fargo and Bank of America.

Frequently Asked Questions

1. Is it necessary to go to the bank to overdraft?

Answer: Depending on the application process which is required by your bank. You might go to the bank physically, or just carry out the process online.

2. Is it possible for overdrafts to affect credit score?

Answer: It can only affect credit score if customers fail to reimburse the money used on time, this will incur interest.

3. If I use more than the overdraft limit, what happens?

Answer: Charges will be incurred for overdrawing the account. You mustn’t go above the limits given during overdrafts.