Answer:
No, according to the FRB Staff:
"EXTENSION OF CREDIT"--Negative Bank Account Balance
The negative balance on a zero-balance account is an overdraft and therefore an extension of credit, unless the negative balance qualifies as an inadvertent overdraft. This is unaffected by the existence of funds in a second account of the account holder, unless the bank has written authorization from the account holder to charge the second account and that account is actually charged in the amount of the overdraft. However, a negative balance outstanding for 24 hours or less would not constitute an overdraft where funds are being automatically or electronically deposited or transferred.
A check drawn and paid against uncollected funds is neither an overdraft nor an extension of credit. It becomes an extension of credit if it is returned to the bank uncollected and does not qualify as an inadvertent overdraft. STAFF OP. of May 4, 1979.
Authority: 12 CFR 215.2(h), 215.3, and 215.4(d).
First published on BankersOnline.com 3/12/07
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