Will a debit card charge a fee when I use my debit card when I don't have enough money for that transaction?

Question

For example, I only have 5 dollars in the bank and I want to purchase a 6 dollars shampoo. When using a debit card, using my pin numbers, will I be allowed the transaction, but charged with an overdraft fee later, or will I be prevented from purchasing that shampoo AND charged with a fee? Thanks! I'm just curious about how that works.

Answer 1

This is how it works in Australia.

There are different things that can happen depending on what sort of account you have and other different factors.

1. Some accounts you simply cannot overdraw. These are special account and you'd probably know if you had one.

2. Some accounts have an overdraft on them. You have to pay for these so again you would know if you had one.

3. The transaction will decline due to insufficient funds. (Usually what happens)

4. The transaction will go through and you will be charged an honour fee of usually about $35 in Australia for overdrawing your account. Usually this happens over long weekends or other times when you put through lots of transactions but the bank hasn't been open to reconcile your accounts or if there's a direct debit coming out of your account on a regular basis and there aren't enough funds in your account.

5. This one pretty much only happens with direct debits. The transaction will be declined and you will be charged a dishonour fee (again about $35) for attempting to overdraw your account. On a normal transaction as a supermarket or ATM this would just decline due to insufficient funds and there would be no charge.

Just to clarify the difference between a dishonour and honour fee is whether or not the bank lets you overdraw your account because the free is the usually the same. Eg. If you phone company tried to direct debit a bill of $95 and you only have $50 in your account and you have good credit and history the bank will let them have the full $95 and charge you an honour free. If, however, you have overdrawn your account too many times in the past or you have really bad credit they will not let the phone company take the money, decline the request, an charge you a dishonour fee.

Answer 2

You can still buy the product, but you will get an overdraft fee.  However, they are apparently very easy to get out of.  My brother has gotten several overdraft fees, but always calls the bank and makes excuses like "my mom said she deposited some money in my account so I thought I had more blah, blah, blah," and they usually erase the fee.  That's not guaranteed, however, so I wouldn't recommend charging more to your card than you have in your account.  Plus that's a good way of falling into the habit of being in debt.

Answer 3

Your debit card won't work. If you try to make a purchase for more than is currently available in your checking account, it will be declined. Since the charge wansen't approved you wont get an overdraft fee. If you write a check and the store doesn't do electronic checking, and the bank subsequently honors the check, you would be charged an overdraft fee.  

Answer 4

debit card is the same as your checking account.  You'll be charged a fee.  It, quite possibly, will be the most expensive shampoo you ever bought.