A couple of months ago, my bank charged me a fee for going over the money that I had in my checking account. The overdraft fee is $35 for every single transaction. And if you are as frugal as me, every dollar counts. When it comes to managing my personal finance, I thought I was on top of it. I check my account at least 3 times a week. This one caught me by surprise because I was an idiot and did not do what I was supposed to: transfer money from saving to checking when checking was low. Here are a few tips to avoid overdraft fee.
Before jumping into it, let’s take a quick moment to dissect my mistake. On that dark-gloomy week, I recalled a low balance on my checking. I also knew that my car payment would kick in at around the same time. I hesitated to transfer the balance from saving to checking because I had a perfect whole figure on my saving. I didn’t want to break the number up, so I decided to pause. By the time I made up my mind, it was a day late.
Know your budget
You don’t have to check your account as frequent as I do. At least once a week, I recommend logging into your account and see where you are at. An additional benefit of this practice is to help to control your spending. Let’s say you only have $100 left in your checking and you really want to get that $130 concert ticket for the coming up weekend. Well, thinking about how much you have in your account is not as helpful as visually seeing it. Your mind will play a trick on you sometimes because your number one priority is to purchase the ticket instead of thinking about whether or not you can afford it.
Related: HOW TO STOP OVERSPENDING ON YOUR CREDIT CARD
Set up Online Bill Pay from credit card only
In my earlier years, I used my checking account to settle the bills by doing automatic withdraw. For example, my monthly car payments, gym membership, and mortgage automatically came out of my checking. Those were all big-ticket items, so I always had to make sure I had enough money in my bank. I remember there were a few occasions where I had to transfer money from saving just to make sure the transaction could happen smoothly. However, since I did not account for my car automatic insurance payment that occurred every 6 months, my checking got over drafted. I soon realized it was not the best practice. By switching my bills payment using the credit card, I was less worry about how much money I have on checking.
Set up alerts to your phone
With the convenience of a mobile device, it allows me to find checking’s balance on my phone. It provides the most current record of the money available to withdraw. Some banks also let me set up text alert or email for every time my account going over the balance.
Set up overdraft protection service
This is an option worth looking into because it is free to sign up. My bank would transfer a minimum of $25 to cover the negative balance. Watch out because if you have a long history of overdraft, the bank will not move the money to cover the balance. Fees are based on the amount of money needed to be transferred.
Takeaway points
I hope these strategies can help you minimizing overdraft costs. In the long run, it’s better to have enough money in the account and avoid altogether a scenario where a transaction can be rejected by the bank. If you are still have question, talk to your bank and ask about their terms or comments below.
