Let’s discuss how to prevent paying overdraft fees! Have you ever overdrawn your bank account and been charged exorbitant overdraft fees? Don’t worry; it can happen to anyone. Here’s the evidence: We just logged into the bill payment checking account to discover that we’d have a negative balance.
We had overdrawn the account, resulting in a $38 overdraft fee. It wasn’t humorous, but we couldn’t help but chuckle at ourselves because we’ve all made financial blunders. But first, let’s define overdraft fees and how you overdrew your account.
What is an overdraft fee?
When users remove extra money from the account then you have in there, the bank will charge you an overdraft. Overdraft fees are a costly and unneeded expense, especially if you have to pay them frequently. There are, however, simple steps you may take to avoid them, as well as strategies to bargain the waiver if you are charged.
How to avoid overdraft fees
Once the user follows just a few simple steps, one can prevent overdraft costs. Here are some strategies for avoiding overdraft costs.
Avoid automatic overdrafts
While overdrafts are designed to assist you to avoid humiliating and inconvenient unpaid bills, you are not obligated to use them. Most of the paperwork that is filled out while opening accounts asks if you wish to use this service. To avoid fees, you can opt-out of automatic overdrafts.
If you opt-out of overdraft protection, your bank would not reimburse you if you overdraw your account, and any payments you can’t make would be returned as unpaid.
Use a free account
Overdraft fees aren’t charged on some accounts. For example, Chime’s Spot Me service allows you to overdraft your account by up to $200 without incurring an overdraft fee.
Register for bank alerts
Setting up an alert to tell you when your account balance falls below a fixed amount is just an easy solution to avoid unforeseen overdrafts or save penalties.
Protection from overdrafts
Overdraft protection is not the same as automatic overdrafts. Your bank covers any overdraft on the behalf of regular overdrafts through regularly lending users money by paying the payment. Overdraft protection allows you to cover an overdraft by transferring funds from another account.
Maintain a cushion balance
Keep a little extra cash in your account to cover any unplanned or missed costs.
“One error people make in this area is forgetting about regular transactions like subscriptions or automatic monthly payments,” says Jackie Beck, the finance expert. “One approach for avoiding overdraft charges is to establish the buffer within the savings account well beyond your monthly spending.”
Alternatives to Overdraft Fees
If you don’t want transactions to be refused, signing up for email or SMS alerts to identify low checking account balances is a preferable option for avoiding overdraft costs. These notifications will give you the option for adding funds to your checking account, deferring a purchase, or paying with a different method.
The certain bank provides cheap overdraft financial services, allowing customers to prevent overdraft fees. Once your current balance is low, it will transfer money from a paired savings account at fixed amounts (like $100) into the savings account.
The most important thing to remember is that you should monitor your money and accounts frequently to avoid incurring overdraft penalties. You may avoid squandering cash on charges and determine where the cash goes through being proactive, such as looking for banks that don’t charge overdraft fees. We all make financial mistakes, but if you learn from them and make improvements, you can succeed financially.