It is quite normal for different credit unions and banks to process certain transactions, even if there happens to not be enough money in your account. It seems like a nice little favor on their part but reality sets in when they slap you with overdraft fees. If it has every happened to you, you already know that even a $3 dollar transaction can leave you paying $35 dollars in fees.
You are at the most risk if your balance routinely runs low or if you do not pay close attention to your balances. If you see yourself fitting into one of those categories, then follow along and use these 5 steps for protecting your account from overdraft.
Step #1- Cut Down on Checks
Not only are checks hard to keep track of, but they always seem to clear too slowly or too fast. The more checks you write, the bigger your chances are for running into overdraft. Some people write checks when they don’t have money hoping that they will later on, and you have no control over when the other person will cash that check. Instead, pay bills online and choose exact times for the money to leave your account.
Step #2- Don’t Believe your Balance
Often times the balance that appears after visiting an ATM is not always bang on. Sometimes the figure is overblown thanks to the overdraft protection your bank offers. In order to really understand and see your balance you should get access online to each of your accounts. This will show you all the transactions that have actually processed and which are pending.
Step #3- Leave a Little Leeway
Your best bet for protection against overdraft is to always try to leave a minimum amount of money in your account that is never touched. Even if that is as little as $100 it can ensure you don’t get struck by bank fees and be in overdraft when you least expect it. It might be wise to also try and keep $500 in your savings account, in case any emergencies arise.
Step #4-Inquire about Opting Out
There are certain banks that will allow you to opt out of the current overdraft set up. You can then choose to shut that ability off and overdraft transactions will simply be declined. If you do decide to opt out then you should definitely stop using checks, as merchant fees can be even higher than the overdraft fees you are trying to avoid.
Step #5- Get Overdraft Protection
You can also look into overdraft protection with your bank where the bank will connect your checking account to other accounts, such as your line of credit or savings account. You will most likely have to deal with an annual fee of between $10 and $50 but it will still work out to a lot less than bounce protection can.
Overdraft fees do not have to be something you deal with on a monthly or bi-monthly basis. Look at the options you have for protection, keep track of your transactions online, and try to avoid writing checks whenever you can. You may even feel like an occasional overdraft fee is worth the protection, but those kinds of fees can really add up over time. Keep yourself out of overdraft and reward yourself with a nice dinner at a fancy restaurant instead.