What occurs when money is withdrawn from a bank account resulting in a negative balance?

When money is withdrawn from a bank account resulting in a negative balance, it is referred to as an overdraft. An overdraft happens when a withdrawal or payment exceeds the available balance in the account, leading to a negative amount. This can occur due to checks being cashed, debit card purchases, or automatic payments that surpass the account balance.

An overdraft can result in fees from the bank and may negatively affect a person's credit if not managed properly. It's important to monitor account balances and expenditures to avoid such situations. Understanding how overdrafts work can help individuals manage their finances more effectively and prevent them from incurring unnecessary costs.