What happens when PayPal overdrafts a checking account (with an ample backup funding source available)?
You should check directly with the seller. I suspect you will find they have not recieved any money. Paypal tend to hang on to money as long as possible in all transactions, and will do anything to avoid giving out cash before it has come in. PayPal will be contacting you shortly, I'm sure.  You'll see the reversal on their site in a few days as well as a fee from their end I bet. "I made this mistake and tried calling Paypal...the first time I have ever been unhappy with their service.  The girl gave me some number but didn't make it clear whether it was an order reference number or a reference phone number for the company I ordered from.  I called within 10 minutes of placing my order and they were unable to cancel or change the payment method.  I did find however, that even though you can't pay paypal with your credit card, some banks will let you.  I went into my account and ""paid"" my account the amount needed using my credit card from the same bank that I had intended to use in the first place...hopefully it went through quickly enough to not get a service fee from Paypal"
"PayPal has a very generous buyer protection program.  That means that the buyer can dispute receiving the goods and get their money back fairly easily (compared to credit cards).  For this reason Craigslist and other sites recommend not accepting PayPal  payments.  I know that many transactions go through them flawlessly.  But unless I really trust someone, PayPal would not be an option for me unless it was the money transfer (different rules; not as easy to get the money back).  However this may be breaking PayPal Terms of Service so I would read them carefully before I went this route.   There have been reports of PayPal putting extended holds on funds and effectively seizing the money by refusing to release the funds.  I have never had this happen (though I did have a sale on eBay reversed though the item was never returned) but there are many reports of it on the Internet. As far as the BoA option I would contact them and see what they recommend. I would find out what their policies are on reversing the transfers and on providing your account number.  They may have a special deposit-only account number you could provide the buyers.  But I would want to learn as much about the system as I could before I started using it.   The Internet has turned the old adage of ""buyer beware"" into ""seller beware"".  There are many schemes that con artists have come up with to defraud unsuspecting sellers.  I received several offers from people wanting to pay me with a cashiers check for a few items I recently sold on Craigslist.  It is scary how prevalent these fraudsters have become." Many banks will allow you to open multiple accounts.  Create a secondary checking account that has no automatic withdrawals and doesn't allow overdraft.  This is the account you'll use for you discretionary spending.  Get an account with a debit card and always use it as a debit card (never as a credit card, even if it allows that). Your employer may allow you to split your direct deposit so that a certain amount of money goes into this account each month.  When it gets to $0, you have to stop spending.  It will automatically refill when you get your paycheck. "You're potentially in very deep water here. You don't know who this person is that you're dealing with.  Before you'd even met him, he just gave you his banking info, seemingly without a second thought.   You have no idea what the sources of his money are, so what happens if the money is stolen or otherwise illegal?  If it is determined that you used any of that money, you'll be on the hook to return it, at the very least.  Who knows what the legal ramifications are either? So it sounds like you began spending his money before you had any kind of written agreement in place?  Doesn't that seem odd to you to have someone just so trusting as to not even ask for that? Was the source of the email about the $2500 from PayPal, or from him or his advisor?  PayPal always sends you a notice directly when funds are received into your account, and even if they were going to put a temporary hold on them for whatever reason (sometimes they do that), it would still show up in your account. I would HIGHLY (can I be more emphatic?) advise you not to go anywhere NEAR his bank account until or unless you can absolutely verify who he is, where his money comes from, and what the situation is. If you start dipping into his account, whether you think you're somehow entitled to the money or not, he could cry foul and have you arrested for theft. This is a very odd situation, and for someone who says he's normally cautious and skeptical, you sure let your guard down here when you started spending his money without making any serious effort to confirm his bona fides. Just because he passes himself off as smart and the ""doctor type"" doesn't mean squat.  The very best scammers can do that (ever see the movie ""Catch Me If You Can"", based on a true story?), so you have no basis for knowing he's anything at all. I am thoroughly confused as to why you'd just willfully start using his money without knowing anything about him.  That's deeply disconcerting, because you've opened yourself up to a world of potential criminal and civil liability if this situation goes south. If this guy was giving you money as an investment in your business and you instead used some of that money for your own personal expenses then you could land in very serious trouble for co-mingling of funds.  Even if he told you it was okay, it doesn't sound like there's anything in writing, so he could just as easily deny giving you permission to use the money that way and have you charged with embezzlement. You need to step back, take a deep breath, stop using his money, and contact a lawyer for advice.  Every attorney will give you a free consultation, and you need to protect yourself here. Be careful, my friend.  If this makes you suspicious then you need to listen to that voice in your head and find a way to get out of this situation." "An accounting general ledger is based on tracking your actual assets, liabilities, expenses, and income, and Gnucash is first and foremost a general ledger program. While it has some simple ""budgeting"" capabilities, they're primarily based around reporting how close your actual expenses were to a planned budget, not around forecasting eventual cash flow or ""saving"" a portion of assets for particular purposes. I think the closest concept to what you're trying to do is that you want to take your ""real"" Checking account, and segment it into portions. You could use something like this as an Account Hierarchy: The total in the ""Checking Account"" parent represents your actual amount of money that you might reconcile with your bank, but you have it allocated in your accounting in various ways. You may have deposits usually go into the ""Available funds"" subaccount, but when you want to save some money you transfer from that into a Savings subaccount. You could include that transfer as an additional split when you buy something, such as transferring $50 from Assets:Checking Account:Available Funds sending $45 to Expenses:Groceries and $5 to Assets:Checking Account:Long-term Savings. This can make it a little more annoying to reconcile your accounts (you need to use the ""Include Subaccounts"" checkbox), and I'm not sure how well it'd work if you ever imported transaction files from your bank. Another option may be to track your budgeting (which answers ""How much am I allowed to spend on X right now?"") separately from your accounting (which only answers ""How much have I spent on X in the past?"" and ""How much do I own right now?""), using a different application or spreadsheet. Using Gnucash to track ""budget envelopes"" is kind of twisting it in a way it's not really designed for, though it may work well enough for what you're looking for." "The answer is that it depends on your bank and your creditor (whomever you are paying). Most banks offer ""overdraft protection"". For a fee, they will process the payment as if you had the money, and your account will become ""overdrawn"". The next deposit you put in will be applied to the overdraft and once the account is ""zeroed"" funds will begin to become available. The fees charged, and whether a particular charge will go through, depend on the bank; a few banks will process a payment without a fee if it only happens occasionally, some will hit you with a charge per debit in excess of the amount, while others will charge you per day on which debit transactions were made while your account was overdrawn, and still others will tack on a charge for leaving your account overdrawn for an extended period. In almost all cases, the for-profit institutions (banks) will charge more than non-profit institutions (credit unions).  Watch out for banks that offer ""automatic overdraft transfer""; they'll automatically transfer from another account (including, eek, a credit card) to cover a debit to an account with insufficient funds. Sounds great, but the fee they charge is often close to the overdraft fee, while without overdraft protection, if the payment were simply denied at point-of-sale, most banks have smartphone apps that allow for instantaneous transfer of funds, for free. I've never heard of a ""partial payment""; you either have sufficient funds to cover the debit or you don't. If you don't, and you don't have overdraft protection, the bank will simply decline to pay. The result of that situation depends on the exact circumstances; if a utility check bounces, they may try to run it again the next day, or they may immediately cut your utilities and come after you for the balance. At point-of-sale, they simply won't give you the merchandise. Some places are really rabid about pursuing ""hot check writers""; if the check doesn't clear you have to pay in cash, on the spot, or they call the police. As far as ""interest on debt"", it doesn't work that way; it's a ""service fee"", otherwise it would be subject to some pretty hefty federal regulation. However, if you figure it as interest, you'd be amazed; let's say you bought lunch at a burger joint for $10. You didn't have enough in the account, but it was close, so the bank let it go - and charged you $35. You have effectively inflated the cost of that meal to $45, a 350% instantaneous price increase (or if you prefer, 350% interest on that $10); I dunno about you but if I were paying $45 for one lunch it wouldn't be at a burger joint. Most banks simply will not process a check on an already-overdrawn account, overdraft service or otherwise; they'll hit you for the overdraft fee (usually actually a fee for an NSF check) AND decline the payment. So, if you had $1 in your account and wrote a rent check for $1000, it'd still bounce even with overdraft service." There are a few factors at play here. Depending on the bank that has offered you the card there are different types of overdraft protection that may have been set up. Typically, if they attempt to run the card with no money, if one of these is in play, you will be spared any overdraft fees by the transaction charging to a designated overdraft account, usually savings, or by the transaction failing due to insufficient funds.  If you know the transaction went through, and you know there were not enough funds in the account to cover the transactions, then you have a few options. If you have overdraft protection that auto charges insufficient funds charges to a separate account, then you have nothing to worry about. If you do not, most banks offer a grace period where you have until the end of the day to zero out your account, that is to say pay the overdraft amount and bring your balance to at least $0.  If this is a charge that occurred in the past, and you have already been charged an overdraft fee, there may still be hope. I cannot speak for all banks, but I know that Chase Bank offers a once per year overdraft forgiveness, where they will get rid of the charges if you agree to bring the account out of the negative. There is a chance other banks will do the same if you call their customer service. Short answer, you can't.  Don't link your primary checking account to PayPal.  Open a separate bank account like ING Direct and keep very little balance.  I wrote about this a while back in my blog. There are many different things that can happen, all or some. Taking Russia and Argentina as precedence - you may not be able to withdraw funds from your bank for some period of time. Not because your accounts will be drained, but because the cash supply will be restricted. Similar thing has also happened recently in Cyprus. However, the fact that the governments of Russia and Argentina limited the use of cash for a period of time doesn't mean that the US government will have to do the same, it my choose some other means of restraint. What's for sure is that nothing good will happen. Nothing will probably happen to your balance in the bank (Although Cyprus has shown that that is not a given either). But I'm not so sure about FDIC maintaining it's insurance if the bank fails (meaning if the bank defaults as a result of the chain effect - you may lose your money). If the government is defaulting, it might not have enough cash to take over the bank deposits. After the default the currency value will probably drop sharply (devaluation) which will lead to inflation. Meaning your same balance will be worth much less than it is now. So there's something to worry about for everyone.