What to do if your account is overdrawn

There is support to help you manage your money if you have overdrawn your bank, building society or credit union account.

Overdrawing your account

Your account may be overdrawn when you take out more money than you have.

This can happen because your account sometimes takes a few days to update after transactions. Overdrawing can also happen when direct debits come from your account.

This may lead to a debt and a fee that you have to repay the financial institution through your account. Financial institutions include banks, building societies and credit unions. To recover the debt and any fee, the financial institution sometimes takes money directly from your account.

If you receive certain income support payments, an agreement exists covering how much your financial institution can take from the money that goes into your account. This is called the Code of Operation (the Code) and, while not legally binding, helps to ensure you have money left over to cover living costs.

For example
If you receive a pension payment of $200 a fortnight, the Code means you can keep at least $180 (90%) of your payment. The financial institution can take up to $20 to repay the overdrawn amount, including fees.

Protected payments

Under the Code, financial institutions can take no more than 10% of the payments listed below from your account.

  • ABSTUDY, including supplements
  • Age Pension
  • Australian Government Disaster Recovery Payment
  • Australian Victim of Terrorism Overseas Payment
  • Austudy
  • Bereavement Allowance
  • Carer Allowance
  • Carer Payment
  • Crisis Payment
  • Double Orphan Pension
  • Disability Support Pension
  • Disaster Recovery Allowance
  • Education Entry Payment
  • Farm Household Allowance
  • Income Support Bonus
  • Mobility Allowance
  • Newstart Allowance
  • Parental Leave Pay
  • Parenting Payment
  • Partner Allowance
  • Pension Supplement
  • Schoolkids Bonus
  • Seniors Supplement
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Widow B Pension
  • Wife Pension
  • Youth Allowance

Also, financial institutions can take no more than 10% of the payments listed below when you are receiving one of the payments above.

  • Assistance for Isolated Children
  • Baby Bonus
  • Bereavement Payment
  • Carer Adjustment Payment
  • Carer Supplement
  • Community Development Employment Projects Participant Supplement and Supplementary Benefits
  • Child Care Benefit
  • Child Care Rebate
  • Child Disability Assistance Payment
  • Clean Energy Advance
  • Dad and Partner Pay
  • Energy Supplement
  • Essential Medical Equipment Payment
  • Family Tax Benefit Part A and Part B
  • Low Income Family Supplement
  • Low Income Supplement
  • Newborn Upfront Payment and Newborn Supplement
  • Pension Bonus Bereavement Payment
  • Pension Bonus Scheme
  • Pension Bonus Top-Up
  • Pensioner Education Supplement
  • Pension Loans Scheme
  • Pharmaceutical Allowance
  • Remote Area Allowance
  • Rent Assistance
  • Single Income Family Supplement
  • Stillborn Baby Payment
  • Telephone Allowance
  • Utilities Allowance
  • Work Bonus
  • Youth Disability Supplement

The following payments from the Department of Veterans' Affairs are also protected with a 10% limit:

  • Crisis payment
  • Defence Force Income Support Allowance
  • Education Entry Payment
  • Income Support Supplement
  • Periodic Payments of Wholly Dependent Partner's Pension
  • Service Pension – age, invalidity, or partner
  • War Widow(er)'s Pension

You can choose to repay more than 10% if you wish.

All other types of income are not covered by this arrangement.

Speak to your financial institution about their specific fees or repayment policies, or to make alternative arrangements.

Participating institutions

Your financial institution has committed to following the Code of Practice if they are listed on the following members’ websites:

Exceptions to the Code

You are not protected by the Code if:

  • your account is overdrawn due to fraudulent, dishonest or unlawful transactions, conduct or activity
  • a third party organises with your financial institution to recover money from your account - for example, you owe money to a business who gets a court order to recover money from your account

Getting help

If you are concerned about an overdrawn account, you should first talk to your financial institution about the Code and other ways they may be able to help you manage your debt.

If your payment has not been released after you have spoken to your financial institution, we can help negotiate.

Call the contact number related to your payment.

If you don't make any arrangement to pay your debt at all and you don't respond to letters from your financial institution telling you about the overdue payment, after 60 days they could:

  • report this to a credit reporting body, which could affect your credit rating, or
  • take legal action against you to take back the overdrawn amount you owe

Read more about:

If you speak a language other than English, you can ask for an interpreter at a service centre or call our Multilingual Phone Service.

We have also translated information about our income support payments. Read more information in your language.

Other support services

Find a financial counsellor in your area on the Financial Counselling Australia website.

If you can't resolve disputes with your financial institution, you can contact the following organisations:

Page last updated: 14 November 2016