If you make a transaction that causes your checking account to go into a negative balance, your bank or credit union may charge you an overdraft fee – not just once, but numerous times if you continue to make purchases.
This can end up creating a dent in your savings that can go unnoticed and hard to track. The best way to avoid this is by reducing the chance of an overdraft fee being charged in the first place.
Overdraft costs may be avoided and help you save money in the long run. These costs are frequently avoidable with a few easy strategies and tricks.
Maintain Vigilance on Your Account Balance
You run the danger of overdrawing your checking account if you need to know how much money is in it. Many individuals believe that maintaining a check register up to date is a chore.
Make it a practice to input each check or check card transaction as they are made. Make time to balance your account when you arrive home. Do this every time you spend; it will eventually become second nature.
Change the Due Dates of Your Loans
Budgeting and paying expenses might be challenging when your due dates differ from your income. Change your due dates to days when you know you will have sufficient funds such as payday. This will work in your favor because it will ensure that you have sufficient funds for those payments, which will help you manage your expenses more simply.
To modify your loan due dates, contact your financial institution and inquire about their regulations and whether shifting your dates is possible.
Opt Out Of Overdraft Protection
Your bank or provider decides whether they will approve or disapprove of over-drafting a charge that might result in a negative balance, but you have power over one thing: canceling your overdraft protection.
If a consumer has overdraft protection, a bank will allow a transaction with sufficient funds in their account. After all, it is temporarily funded by the bank.
Keep Track of ATM Cash Withdrawals
People usually neglect to record their ATM withdrawals, and when their bank statement arrives, they discover they have $60, $100, or whatever amount they thought they had. It is recommended to always save your ATM receipt in a secure location, and refer to the receipt when you get home to input the withdrawal into your register.
Set up Low Balance Alerts
Financial institutions frequently provide services that might assist you in keeping track of your balances, no matter how hectic your life may get. Sign up for notifications if your balance falls below a certain threshold to help you prevent overspending and over-drafting. Make the process of checking your balance automatic.
When An Overdraft Occurs, Make a Rapid Deposit or Transfer of Funds
Overdraft costs can exceed $30 for each incident, and some banks may charge you additional overdraft fees if you continue to overspend your account. However, if you know that your insufficient balance has just triggered an overdraft, you may still be able to avoid a charge.
Check with your bank to see if there is a grace period to a positive balance to avoid fines.
Protect Your Checking Account
When all else fails, having a little buffer in your account is generally the most efficient approach to avoid overdraft costs. To make a cushion, make $100 or whatever amount you want the cushion to be, but leave the money in your register. Try to ignore the cushion and go about your business as normal. If you get into problems and spend more than your balance because of utility bills with auto payment methods, the $100 or whatever amount will pick up the slack, hopefully avoiding an overdraft fee.
If your checking account is in the red, having additional funds on hand in a different account can help you reallocate funds into your checking account when it starts running low on balance. Avoid overdraft penalties by just spending what you have on hand. Using cash for purchases imposes a mental “limit” on your expenditures. Then you may use your bank account to pay bills and set up automated payments. This makes budgeting for your monthly expenditures so much easier!