How to Avoid Overdraft Fees
February 3, 2022
If you’ve ever made a purchase resulting in a negative balance on your account, you may have been charged an overdraft fee by your financial institution. This can be a costly process that is avoidable if you follow these strategies.
Monitor your accounts
Review your financial accounts weekly or more frequently to make sure your balances and purchases are your own and that your accounts have enough funds to cover your purchases and bills. You can check your account balances through your financial institution online, via mobile app, by calling, or by visiting an ATM or branch.
Establish account alerts
Once you regularly check your account balances, find out if your financial institution allows you to set up email or mobile text alerts to notify you when an account goes below a certain balance you set. This type of alert can help you avoid overdraft fees. Other account alerts, such as for large purchases, single transaction amounts, and large ATM withdrawals, can also help you better manage your finances.
The fee for a overdrawing your account can be as much as $40. And, for example, if you have three transactions occur before you know your account has a negative balance, you may be charged $120 in fees.
If you are alerted to when your account balance is low, you may be able to prevent an overdraft fee by transferring funds immediately can prevent fees. Keep in mind, leaving a balance negative for several days may result in an extended overdraft fee.
To make sure you have funds available to transfer, establish an emergency savings fund. This money can be used to cover low balances as well as unexpected costs, such as car repairs or medical expenses.
Following these strategies can help minimize overdraft costs. However, it’s best to have enough money in your account to avoid a situation where a transaction can cause an overdrawn account
Tags: Budgeting, Tips and Tricks, Money Management