Overdraft+fee

An **overdraft** occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to be "**overdrawn**". If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply. Overdrafts occur for a variety of reasons. These may include:
 * **Intentional short-term loan** - The account holder finds themselves short of money within a few days of payday and knowingly makes an insufficient-funds debit. They accept the associated fees and cover the overdraft with their next cash or check deposit.
 * **Failure to maintain an accurate account register** - The account holder does a poor job at balancing their checkbook resulting in the customer overspending their available balance. This can also result if joint account holders fail to account for each others spending.
 * **ATM overdraft** - Banks or ATMs may allow cash withdrawals despite insufficient availability of funds. The account holder may or may not be aware of this fact at the time of the withdrawal. Some banks give the holder a chance to return enough cash to the account in time in order to avoid the penalty, while others do not. If the ATM is unable to authorize a withdrawal from the cardholder's bank, it may automatically authorize a withdrawal based on limits preset by the [|authorizing network].
 * **Temporary Deposit Hold** - A deposit made to the account can be placed on hold by the bank. This may be due to Regulation CC (which governs the placement of holds on deposited checks) or due to individual bank policies. The funds may not be immediately available and lead to overdraft fees.
 * **Unexpected electronic withdrawals** - At some point in the past the account holder may have authorized electronic withdrawals by a business. If the business makes a debit without warning the account holder, it may cause an overdraft or leave insufficient funds to cover a subsequent withdrawal or debit. This could occur in good faith of both parties if the electronic withdrawal in question is made legally possible by terms of the [|contract], such as the initiation of a recurring service following a free trial period. The debit could also have been made as a result of a wage garnishment, an offset claim for a taxing agency or a credit account or overdraft with another account with the same bank, or a direct-deposit chargeback in order to recover an overpayment.
 * **Merchant error** - A merchant may improperly debit a customer's account due to human error. For example, a customer may authorize a $5.00 purchase which may post to the account for $500.00. The customer has the option to recover these funds through chargeback to the merchant.
 * **Chargeback to merchant** - A merchant could receive a [|chargeback] because of making an improper credit or debit card charge to a customer or a customer making an unauthorized credit or debit card charge to someone else's account in order to "pay" for goods or services from the merchant. It is possible for the chargeback and associated fee to cause an overdraft or leave insufficient funds to cover a subsequent withdrawal or debit from the merchant's account that received the chargeback.
 * **[|Authorization holds]** - When a customer makes a purchase using their debit card without using their PIN, the transaction is treated as a credit transaction. The funds are placed on hold in the customer's account reducing the customer's available balance. However the merchant doesn't receive the funds until they process the transaction batch for the period during which the customer's purchase was made. Banks do not hold these funds indefinitely, and so the bank may release the hold before the merchant collects the funds thus making these funds available again. If the customer spends these funds, then barring an interim deposit the account will overdraw when the merchant collects for the original purchase.
 * **Bank fees** - The bank charges a fee unexpected to the account holder, leaving insufficient funds for a subsequent debit from the same account.
 * **Playing the Float** - The account holder makes a debit while insufficient funds are present in the account believing they will be able to deposit sufficient funds before the debit clears. While many cases of playing the float are done with honest intentions, the time involved in checks clearing and the difference in the processing of debits and credits are exploited by those committing [|check kiting].
 * **Returned check deposit** - The account holder deposits a check or money order and the deposited item is returned due to [|non-sufficient funds], a closed account, or being discovered to be counterfeit, stolen, altered, or forged. As a result of the check chargeback and associated fee, an overdraft results or a subsequent debit which was reliant on such funds causes one. This could be due to a deposited item that is known to be bad, or the customer could be a victim of a bad check or a [|counterfeit check scam]. If the resulting overdraft is too large or cannot be covered in a short period of time, the bank could sue or even press criminal charges.
 * **Intentional Fraud** - An ATM deposit with misrepresented funds is made or a check or money order known to be bad is deposited (see above) by the account holder, and enough money is debited before the fraud is discovered to result in an overdraft once the chargeback is made. The fraud could be perpetrated against one's own account, another person's account, or an account set up in another person's name by an [|identity thief].
 * **Bank Error** - A bank employee misreads the handwritten amount on a check, so an amount much larger than the writer intended to write the check for will actually be removed from the account. On other occasions, a computer error could be responsible for an overdraft. There are also other types of bank errors which can work to the account holder's detriment, but others that could work to their benefit.
 * **Victimization** - The account has been robbed by a thief. This could occur as the result of demand-draft, ATM-card, or debit-card fraud, [|skimming], check forgery, an "account takeover," or [|phishing]. The criminal act could cause an overdraft or cause a subsequent debit to cause one. The money or checks from an ATM deposit could also have been stolen or the envelope lost or stolen, in which case the victim is often denied a remedy.
 * **Intraday overdraft** - A [|debit] occurs in the customer’s account resulting in an overdraft which is then covered by a credit that posts to the account during the same [|business day]. Whether this actually results in overdraft fees depends on the deposit-account holder agreement of the particular bank.