When your bank account balance isn’t enough for debit card charges and checks to go through, one of two things will happen: the transactions will be denied, or you will overdraft. For each transaction that overdrafts, you will have to pay a fee. If you’re not careful, you can end up overdrafting multiple times and may have to spend a lot of money in overdraft charges. The following tips can help you to avoid overdraft fees:
Ask to have the charges waived
If it’s your first time overdrafting or you haven’t overdrafted in a long time, call your bank and ask to have the overdraft charges waived. If overdrafting isn’t something you make a habit out of and you’ve been a customer for a long time, there’s a good chance that your bank will be willing to make an exception and waive those extra fees. However, if you frequently overdraft, it’s unlikely that your bank will be willing to do this more than once.
Get rid of overdraft protection
If it seems you’re overdrafting quite a bit and you’re dealing with some financial issues at the moment, it may be in your best interest to opt out of overdraft protection. Without overdraft protection, any purchases or payments you make through your bank account will be denied if there aren’t sufficient funds. However, you won’t overdraft and you won’t have to worry about overdraft fees. Evaluate the main reasons as to why you overdraft before making this decision. If you have no other choice, paying those overdraft fees might be worth it if it means getting your monthly bills paid on time. On the other hand, if you find that non-essential purchases are the culprit when it comes to your overdrafting, you may be better off getting rid of overdraft protection.
Track your spending
It can be easy to forget about different purchases or automated monthly bills, and when you forget about these things, they might go through when you don’t have enough money in the bank. Even a very small purchase can cause you to overdraft if the transaction doesn’t post while you still have sufficient funds in your bank account. By tracking your spending, you’ll have a better picture as to what is going to go through and when. You can balance your checkbook, log in to your bank account online each day to monitor your current balance and purchases, and track everything you spend (including bills) in a spreadsheet. Always overestimate how much money you’ll need to keep in your account each month; it’s always better to have some extra cash in your bank account, rather than not enough.
Sign up for alerts
Even if you do check your bank account balance every day, it can easily change before you check it again, and that’s how balance alerts can come in handy. Many banks offer these features for their customers, and customers will be alerted (usually by email or text message) when their account balance has dipped below a certain amount. If this is brought to your attention the moment it happens, you can take action by making a cash deposit (or transfer from savings) before any additional transactions post and cause you to overdraft.
Don’t use your debit card as a credit card
When making purchases with your debit card, you’ll often be asked if you want to use your card as a debit or credit card. Either way, the money comes from your bank account, but if you choose credit, it can take a few days for the transaction to post. This can be problematic, because you may not have the money in your account by the time the transaction posts. By using your debit card only as a debit card, the transaction will post right away, and when you know you have the available funds.
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Nothing above is meant to provide financial, legal, or tax advice. You should meet with appropriate professionals for such services.