Final answer:
A replacement card is generally not processed if there is a negative balance on the account to protect financial integrity and to prevent additional overdraft fees.
Step-by-step explanation:
The statement that a replacement card cannot be processed by the system if there is a negative balance on the account is generally true. Financial institutions often have policies in place to prevent additional transactions or services, such as issuing replacement cards, if an account is overdrawn. This is because it's costly to carry a negative balance at your bank. Banks may charge overdraft fees when you spend more money than you have, and allowing further transactions could increase the risk for both the bank and the customer. Debit cards are linked directly to the holder's bank account, whereas credit cards are not, and thus spending on a debit card affects your real money balance directly. The bank's system is designed to protect the financial integrity of both the institution and its customers.