Overdraft fees can be a costly problem that can lead to financial trouble. But there are ways to avoid overdraft fees and keep your finances on track.
1. Set Up Automated Payments
Automatic payments are a great way to streamline your accounts payable process. They can also help reduce costs and improve your cash flow.
They can also be excellent protection from overdrafts and other fees. However, it’s important to note that they aren’t infallible, and you need to check regularly to make sure your scheduled payments go through as expected.
2. Keep Track of Your Expenses
Whether you use pen and paper or a spending app, keeping track of your expenses can help you keep your finances on track. Regularly analyzing your costs lets you identify areas where you can make changes and save money.
It also lets you quickly identify unauthorized credit or debit card charges. This can save you from paying excessive overdraft fees.
3. Set Up a Savings Account
Savings accounts offer a secure place to stash money you want to save for the future. They can also earn interest on your deposits.
Before opening a savings account, consider your savings goals. This will help you decide which type of account is best for your needs. Shopping around for the best rates and fees is also a good idea.
4. Set Up Instant Notifications
When you set up instant notifications, you’ll receive a notification when your account reaches a low balance. This will warn you to avoid spending until you have more money in your bank account.
Many banks offer this service, which can be an excellent way to protect yourself from overdraft fees. But be sure to check with your bank before turning on this feature.
5. Sign Up for Text Message Alerts
Several financial apps offer low-balance alerts that send you text messages when your account dips below a certain amount. This allows you to monitor your bank accounts and avoid costly overdraft fees.
Connecting a savings account to your checking account is another strategy to avoid paying overdraft fees. The money will automatically move from the savings account to cover the transaction if you overspend and your account balance falls below zero.
6. Set Up a Backup Account
Many banks and credit unions offer overdraft protection, which allows you to make purchases without having a negative balance. However, these services can cost big bucks if you regularly overdraw your account.
You can set up a backup account to avoid these fees to cover overdrafts. This could be a savings or money market account linked to your checking account.
7. Ask Your Bank About Overdraft Transfers
Overdraft fees are a significant drain on your budget. They can quickly accumulate to hundreds of dollars.
Luckily, there are ways you can protect yourself from overdraft fees.
When you run out of money, overdraft transfers from many banks let you move money from your savings account to your checking account. These transfers can be a much less expensive alternative to overdraft fees.
8. Switch Banks
One of the best ways to avoid overdraft fees is to switch banks. These days, it’s relatively easy to make this change online or at a branch.
Before you start the process, create a master list of all your bills and direct deposits. This way, you can ensure everything gets transferred over smoothly.
9. Don’t Forget About Your Checking Account
Remember to check your bank balance and record every transaction in your check register. This includes debits, credits, and any checks you write that haven’t been cashed yet.
Also, consider setting up a savings account with your checking to buffer any overdraft fees.
10. Be Mindful of Your Spending
One of the best ways to protect yourself from overdraft fees is by being mindful of your spending. This means knowing what you buy and whether you’re maximizing your money’s potential.
This also helps you understand where you can cut back and save more. It will help you achieve your financial goals and make a real difference.