11 Jul How to Avoid Overdraft Charges
Overdraft charges can seem like an unavoidable part of life. It can be hard to keep up with transactions, withdrawals, and account balances when we live in such a fast-paced financial environment, and overdraft fees can pack a powerful punch. There are a lot of ways you can protect yourself from being hit too hard with these charges, and they aren’t just limited to spending within your means.
Don’t Sign on for Overdraft Protection
Overdraft protection is a service that allows account holders to complete a transaction even if they don’t have the funds for it in their account. The bank temporarily covers the transaction, and a fee is incurred for using the service. While it might sound tempting to have this as a backup option, it’s better in the long run to simply allow a transaction to be declined. There’s no fee, and while it might hurt your pride, it won’t hurt your wallet.
Pad Your Account
A great way to avoid overdraft fees and to avoid spending above your means is to keep your checking account “padded” with an extra hundred or so dollars. Keep this amount in your account from month to month, and don’t include it in your budget. That way, if you wind up miscalculating whether you had enough to cover a purchase, you’ll have a cushion to fall back on, instead of overdrawing your account and incurring fees.
Eliminate Automatic Payments
Automating payments seem like a convenient way to pay your bills without thinking about it; until, of course, you forget that your electric bill is due, assume you have enough money in your account to buy a new case for your laptop, and wind up overdrawing. The best way to avoid overdrafts is to have a tight handle on your checking account, and the best way to do that is to make sure you authorize every transaction. While paying your bills manually might seem far less convenient, it will likely save you money in the long run.
Pay Right Away
Waiting to pay off an overdraft fee can seem tempting, but the longer you wait, the more fees stack up, and the harder it will be to pay back. Pay the fee and add some cash to your account as soon as possible to avoid any additional fees.
Of course, the best way to prevent overdrafts is simply to have a very good handle on what it means to spend within your means. Create and stick to a budget, and if you’re struggling, talk to your bank or a trusted financial advisor on how to get and stay on track. Breaking the habit of overdrawing can seem difficult, but with time, patience, and effort, it is completely possible!