A negative bank account balance might not appear on a traditional credit report, but it can be every bit as damaging to your financial situation if it’s not corrected. Fixing an old negative balance may be as simple as providing the cash to get the account out of the red. Once that happens, however, you’ll still have to be careful that it doesn’t stay on your record anyway.
Don’t Ignore It
Regardless of whether the news comes as a surprise or whether it’s simply a debt you don’t think you can afford to pay, having a negative balance on a bank account can have far-reaching effects. Once it gets recorded into ChexSystems database and the account is closed, it can make it difficult to find another bank that will entrust you with a checking account. Negative information remains in the system for five years, so it’s imperative to fix the negative balance promptly to limit its effects.
To determine any negatives on your banking record, order a free report from ChexSystems. You can order one once every 12 months. If the negative balance is being listed in error, or if there’s derogatory information there that isn’t yours, contact ChexSystems to dispute it. If you’ve paid off your overdue balance and the bank hasn’t reported that your account was paid, contact the bank as well. The bank is obligated to report when an account is paid or settled in full.
Determining the Balance
If you determine that the overdue balance is valid, find out how much of it is principal and how much is fees. Sometimes, you can get your bank to settle the debt for simply the principal, particularly if you’re making a lump-sum payment. If that’s the case, make sure the bank agrees in writing that the amount you are offering will settle the debt in full, and confirm with ChexSystems that it is being reported as such.
Closing the Account
Pay the balance off and get written proof from the bank that the obligation has been fulfilled. Once the balance has been paid off, you’ll have to perform your due diligence to close the account and make sure it remains closed. Even if you tell the bank to close your account, many will reopen it should an automated deposit arrive. Should other transactions hit the account, whether real or fraudulent, you may wind up back where you started.
- Huffington Post: Bank Accounts Are Hard to Close, and Even Harder to Keep Closed
- The New York Times: Over a Million Are Denied Bank Accounts for Past Errors
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