Overdraft fees quickly add up, an unnecessary $30-plus expense that you should avoid at all costs. With just a few easy steps you can make sure that you never pay an expensive overdraft fee on your account again. Read on to see how you can permanently banish outrageous overdraft fees.
1. Set Up A Low Balance Alert
It’s common for account holders to get charged an overdraft fee needlessly. This is because many account holders don’t always check their current account balances, and unknowingly go overdrawn. It is a simple problem with a simple solution.
Setting up low balance alerts ensures that you’re aware when your checking account balance is getting dangerously low. Whether it’s by email or text, a low balance alert can prompt you to top up your account before you get stung with repeated expensive overdraft charges.
2. Opt Out Of Overdraft Protection
Banks offer “overdraft protection” which is intended to let your charges and payments through even if there are insufficient funds in your account. However, you pay for the privilege in the shape of overdraft fees.
Instead, consider opting out of overdraft protection. You might have to offer a different card at a payment terminal if your card is declined or make manual arrangements to pay a bounced bill. Yet you’ll never be stung with huge overdraft fees.
3. Link Your Bank Accounts
Some banks allow you to link your checking account to a savings account or a credit card. When you run out of cash in your current account the bank will automatically ping funds over from your savings account. There is a fee here too, but it is typically about a third of an actual overdraft charge.
You’re still well-advised to avoid making use of these automatic transfers but at least you will save yourself a bundle compared to an overdraft charge, never mind repeated overdraft charges.
4. Top Up Your Account Straight Away
Sometimes an overdraft charge is purely accidental. Perhaps you missed your low balance alert, or perhaps a bigger than expected bill went through your account. You won’t get the first overdraft chargeback, but you can make sure you don’t get stung with repeated fees.
The key is to immediately top up your account with money as soon as you notice the first overdraft charge. Don’t make the mistake of thinking an overdraft charge is once-off: you will keep paying a fee for every transaction that makes your account further overdrawn.
5. Borrow Money Cheaply
If you notice you’re about to go overdrawn or already got stung with the first charge, but don’t have any cash to top up your account, consider borrowing money. You’re likely to find a lender that can supply short-term loans more cheaply than the cost of an overdraft.
Not sure where to look? Comparison sites like OverdraftApps.com can help you find a cheap way to top up your checking account. Sign up for an overdraft app in advance of needing the money and you could even borrow for free, or for a minimal monthly fee.
6. Make Use Of A Prepaid Debit Card
The overdraft charges incurred by debit card payments can be the most frustrating. It is one thing to be charged $35 because a $500 bill was allowed through, but incredibly frustrating to pay a $35 overdraft fee because you just purchased a $1 can of soda.
An easy way to stop charges like this is to simply stop using a debit card linked to your checking account. Instead, use a prepaid debit card. When your funds are up your transaction is simply declined. No surprise overdraft charges here.
7. Improve Your Financial Planning
Overdraft charges are often the result of poor financial planning. Yes, a low balance alert will help but often checking account holders end up with a low balance when they don’t expect it. Financial planning is the key.
Make sure you budget every month so that your spending does not exceed your income. In fact, spend a little less than your income so that you have spare cash in your account. A bit of financial planning can quickly kill the chance of overdraft fees.
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