How to Avoid Hefty Overdraft Fees And Take Control of Your Account

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By Jacob Maslow

With online banking and cashless transactions, making purchases and payments has never been more convenient. However, that convenience has also made it harder for many to track their spending.

For those who are opted into overdraft programs, overspending will have bigger consequences. While your bank shoulders the exceeded amount from your purchase, they charge you – a lot.

Overdraft fees come at about $34 on average, and your bank will charge it for every transaction you make using your account. This will go on and on until you’re able to repay the overdraft fees.

Overspending suddenly becomes all the more risky. That online splurge? That emergency payment you had to make for your car? Every unexpected or impulsive transaction can open you up to exorbitant overdraft fees, and these could seriously impact your financial health.


How to Avoid Hefty Overdraft Fees

Think you’d rather get charged overdrafts than have your transaction declined? Think again. According to a survey commissioned by Pew, overdrafts can take up as much as a week’s worth of salary!

If you want to prevent these fees from shaving off your precious earnings, consider these key strategies:


  1. Keep Your Check Register Updated

One way to take control of your account is by being more organized when using it. Record all checks when you write them,and keep an accurate record of all ATM and card payments.

Don’t rely on your mental tally; you’ll have a hard time remembering every transaction. Plus, your balance may not always show the true representation of your available balance. You may have checks that are not yet cleared or bills that are not yet processed when you check your balance.

You can make a record of your account through pen-and-paper, an Excel spreadsheet, or mobile apps that track your spending.Basically, you have to be aware of how much money is in your account and when automatic transactions will occur.


  1. Use Cash

Money envelopes are making a comeback now, as many are trying to be more mindful of their spending.

Cash-based spending is also helpful if you’re trying to guard yourself against overdraft fees because you are able to track every purchase or payment closely.Remember, overdrawing your account even by a few dollars can already cost you regrettably high fees.

So instead of relying on your checking account for all transactions, you may want to put a small amount in your account (or in an envelope at home) and keep it there should you need to make payments unexpectedly.

Additionally, you could start using cash for small purchases. Using a debit card for such expenses can make budgeting harder to track. Whether it’s a gas bill, or a quick trip to the store, pay with cash.


  1. Learn to Spot Different Overdraft Programs

Because banks earn healthy revenues from overdrafts, they are quite shrewd in offering overdraft programs to their account holders.

Banks would often use different names such as, “bounce coverage”, “courtesy overdraft protection”, and others.

Beware of these offerings. You could be charged $20 to $35 per overdraft. Other banks charge fees per day until you are able to gain a positive balance on your account again.

When you open an account, check the fine print or call your bank to inquire about their overdraft program. You can opt-out in case you find out that you’re enrolled.

If you want to know more about which banks have the minimal overdraft fees check out money-rates.


  1. Use Alerts

Most banks enable account alerts, which are meant to remind you about balance status to help avoid overdraft fees.

There are alerts for low balance, spending limits that you yourself can set,and external withdrawal alerts for any transaction where there is no card swipe(to keep track of your online purchases and recurring subscriptions).


  1. Try to Ask for a Refund

If it’s your first time to overspend, you can contact your bank. Most institutions will waive the overdraft fee if you ask. If you’ve never had a fee refunded in the last 12 months, chances are they will post a credit to your account.

Just make sure that you won’t turn this into a habit. After all, banks rarely do it more than once.

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