A negative cash balance can happen when a banking institution rejects a deposit and pulls back the funds.
It can sometimes take up to seven business days for a bank to notify Wealthsimple about a rejected deposit. In the meantime, you may have invested funds in your account that aren't actually there.
Fix a negative cash balance in your account
There are three ways to fix a negative cash balance –
- Sell enough of your investments to cover the cash balance that you owe
- Resolve the issue with your bank and resubmit your deposit
- Submit a new deposit from a different bank account
If your bank rejects your deposit and pulls back the funds from Wealthsimple, you can cover the negative cash balance by making a new deposit equal to or greater than the negative balance. You'll need to do this by 11:59pm (ET) the same day we notify you.
If you still have a negative cash balance the following morning, we may need to liquidate your holdings to cover the amount owing.
How does liquidation work?
In the event that we need to liquidate some of your shares to cover the negative cash balance in your account, we’ll start with the most recent whole shares you’ve purchased and will sell them at the current market price.
We’ll sell enough shares to cover the full cash balance that you owe. We’ll start by selling all your whole shares and if you are still left with a negative cash balance, we will sell any fractional shares in your account as well. Any extra cash left over from the sale will get added to the cash balance in your account.
If the value of your holdings at the time of sale is less than the amount needed to cover the negative balance, you'll need to make an additional deposit to cover the remaining negative balance.
Reasons for a rejected deposit
Below are the most common reasons why a bank might reject a deposit –
- There were not enough funds available in your bank account to complete the deposit (NSF)
- The funds in your bank account were under a clearing period and couldn’t be moved
- You tried to deposit from something other than a chequing or savings account
- Your bank account number does not match the institution and transit number
If you’re not sure why a deposit was rejected, we recommend contacting your bank.