Can “insufficient funds” result in a given checking account even though a direct deposit is made on the same calendar day? In short, isn’t an account technically overdrawn, albeit only for a few hours or even minutes? I tend to keep my cash anywhere but in a checking account, which only garners 1/10th of 1 per cent per annum, not enough to retire on. The other day I paid some bills and saw that my checking account that day would have a grand total of $.07, at least until my paycheck was installed that same day. So, I chickened out, just in case, and transferred $25 bucks from cash brokerage to prevent that nagging feeling of insolvency.
It might depend on the bank…
My friend had an account with Fifth Third. He was online transferring money from savings to checking. His checking account only had a few dollars in it. He accidentally transferred from checkings to savings (for some reason Fifth Third let him do this) - which immediately overdrew his checking account. He re-did the transfer, this time correctly from savings to checking. He was hit with an overdraft fee - which spiraled into some other nasty stuff (fee was unexpected, caused him to overdraft again a few days later, hit with more fees, etc) and he obviously left that bank.
So yeah in this case the account was overdrawn for a matter of seconds and the bank was quite happy to take an overdraft fee.
Wow, did he call them?
I accidentally overdrew my account once. Wrote a check for $100 a few days before. The second I realized the problem (12:30 at night) I drove to and ATM and put the cash in to cover the check hoping it wasn’t deposited yet. The next day I checked my balance, and while it was positve, the available balance was in the red. This happened becuase the check cleared my account that day, but the cash didn’t clear the account until later in the day. I called the bank told them I realized I made a mistake and ran to an ATM to put the cash in to cover it and that I understand what happened blah blah blah I’ve never done this before (as he could see, besides I NEVER NEVER NEVER float checks, it was an honest mistake) and he cleared the overdraft fee and made sure all debits from my account would be paid without fees until the cash became available.
The fact that I also have a mortgage and a line with the bank may or may not have made a difference. I’m guessing that it didn’t. It was probably more likely my history of not bouncing checks that made him do it.
Well, it has happened to me through an extremely unlikely series of events (okay, okay, I messed up) that my paycheck was to be direct-deposit-ed on the same day that an electronic payment was to be withdrawn. I could imagine (and wonder) if the withdrawal is attempted electronically before the deposit, that would result in an overdraft. Or is everything all right if this happens the same calendar day. Interestingly with online bill-pay and banking websites offering much more of a real-time balance statement I have noticed that the balance will fluctuate and settle on strange amounts that seem to bear no relation to my actual balance, or a sum that can’t possibly be correct regardless of the order that the checks and payments are presented relative to known balance.