What do you mean I am overdrawn?

Share Draft Checking accounts provide a great convenience when it comes to purchasing goods and services - simply swipe your VISA Debit Card or sign the check and you are done. However, you must make sure that there is money in your account for this to work. Overdrawing your account is easily done when accurate records of your deposits, withdrawals, checks, and debit card transactions are not kept. Being overdrawn means that you have tried to spend more money than you have.

How can I be overdrawn when I still have checks?

The number of checks that you have has no direct relationship with how much money you have in your account. The convenience side of the share draft checking account is that you get the privilege of carrying your checkbook and VISA Debit Card with you at all times. The problem is, you can use these products without having any money in your account. You are responsible for all legal and valid transactions conducted on your account with your debit card or checks, so make sure that there are funds to cover these transactions.

So what happens when I have a 'Overdraft'?

There are 2 basic responses that the credit union takes when a member has an overdraft on their account. The first option that the credit union has is to pay the check/transaction, notify you that this has occurred and then charge you a fee for doing so. Within this option, there are 2 main ways that this occurs:
1. Transfer from your Share Savings account ... there is no fee for this transfer (in fact, it can be setup to automatically transfer the funds when an overdraft occurs. There is a limitation on how many times this can happen each month though ... federal regulation limits the number of non-in-person transfers from a 'savings' account to 6 per month. Once you have reached six, you must make the transfer in person. The other option for this transfer is an 'Overdraft Line of Credit'. This is basically a loan that you take out only when you need to cover an overdraft. You are setup for a limited amount and if you incur an overdraft, the funds are transfer from this line-of-credit and not your savings account. BayLands does not charge a fee to setup, give you access to or transfer from an Overdraft Line of Credit. You will be charged interest on the amount that you are borrowing to cover the overdraft and this will be automatically withdrawn from your account at the end of the month.

The second response the credit union can take with the 'overdraft' is to return the unpaid check to the person or business it was written to. This is called 'bouncing' a check. If the check is bounced you will have to pay a Not-Suffiecent-Funds (NSF) fee to both the financial institution and the business to which it was written.

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Information on this page is contributed to by the Credit Union National Association (CUNA)