What happens when you try to make a purchase with a debit card, and there is not enough money in your account?

What if you are making a purchase at a store for say $250 and you only have $120 in your account? My assumption is that the transaction is denied and there are no fees (assuming no overdraft... which I don't have). They wouldn't charge an NSF fee in this case would they? In case it matters, I'm in Canada.





I am thinking of ceasing the use of my credit card because I screwed up my book keeping this month and didn't have the money in my account when I tried to pay off my credit card. That mistake cost me $60. Dave Ramsey would call that a "stupid tax".





I just read a story online: the person made a bunch of purchases one weekend, then bounced a check on Monday, and all those weekend purchases and the check generated NSF fees, but that's a little different.





Thanks all!

What happens when you try to make a purchase with a debit card, and there is not enough money in your account?
I get asked this question all of the time! Lets say for example, you have $50 in your account and you go to Burger King, then get a tank of gas, and then buy your mom some flowers for her birthday. Lets say 10 bucks at BK, 45 bucks for gas, and 30 for flowers.





Normally, I would worry about the US/Canada exchange rate, but the Canadian dollar is worth more than the US!





So, you got $50 in your account and you spent $85. One would think that you would go overdrawn or the merchant would cut up your debit card - not true. More often that not, when you swipe your card at the store, the merchant is only putting an authorization through.





Most common at gas stations, they only put a $1 hold on your account to make sure the card is linked to an account that is at least open. No matter if your account has $1 or $1000, it doesn't matter, they will get their money in the end, because the debit card system is automated.





So the $45 in gas is actually only $1 for the day that you swiped your card, so it will let you get lunch and buy mommy some flowers. However, the next day the gas station will submit the whole $45 for payment.





So if you run down to the bank with a cash deposit that day or very early the next morning, more likely than not, you won't be charged with an NSF fee. But if its a weekend or a holiday, more likely than not your window will have been missed and you will be owing the bank some money!
Reply:Dave Ramsey Rocks!!





Banking can be tricky. If you enter your pin to use the card, it will be denied if you don't have enough to cover it. If the cashier does it as a credit, I don't think it will necessarily always decline it. Sometimes it takes a charge down by 'credit' a few days to post to your account. I think this is what happened in your example. My bank does not even 'post' pending transactions until Tuesday morning. Including all my weekend spending. So it can all pile up if you don't keep track!
Reply:dont do it.
Reply:one of two things will happen. Your card will get denied or it gets accepted. If it gets accepted you will overdraw your account and get charged an NSF or non suffiecient funds charge.





Yes, it is possible for a debit card transaction to go through your account even when you don't have enough funds. Such as your bank or the retailing agent's credit/debit service is not online or communicating.





Another example is a gas station. You put your card through first THEN you pump the gas and it tells you what you are charged.





It does this because when you put your card through it does an inquiry for $1.00.





This is not on all banks but most.





I would recommend using credit or having overdraft protection, a line of credit or from a savings account
Reply:Ive done this mess up. You get ISF charge to be deducted first when you do next deposit, so you have to know what you were short and add the bank charge and that only fixes that one. If another pops up its another charge. Soo I find it best to stop using card till after deposits alll clear with positive. Use cash for awhile to be sure.
Reply:Typically, it would just reject the charge and the cashier would tell you that your card has been rejected. There would be no fees incurred.





However, similarly to what you mentioned, you can encounter problems if you charge it and the place of business doesn't send the bill off to the bank immediately.


For example, recently I bought a couple of things late at night on a Friday (late enough that the bank didn't process the charges) and then used an ATM very early in the morning on the following Monday. The receipt showed that I still had money left in the account so I went and purchased something else I needed, intending to deposit more money the next day.


However, about a hour after that (unknown to me) the charges from the previous Friday went through and since they couldn't decline the payment at that point, I went negative on the account and got charged an overdraft fee.








So... be careful of that, but in almost any other situation, it would just reject the card.
Reply:If you don't have Over Draft Fee Protection then you will be denied. But for example on a Sunday you might just be able to have your transaction go through... and on Monday you will have a really bad surprise.





If you know you have less $$ in your account that you are going to spend DON'T do it.





There is always the option of depositing money to cover your transaction. If you get the money in your account the same day of the charge... you SHOULD be OK.





Good Luck!!