How To Get Rid Of Overdraft And Bounced Check Fees
Getting rid of overdraft and bounced check fees is a really important step if you happen to be one of the people who is at odds with this problem. Not only is this a very expensive problem, it should be regarded as a red flag and a very serious threat to your financial future because it denotes a poor grasp of basic money management.
What’s an overdraft? An overdraft is simply the negative balance that shows up on your account balance after you’re made one or several transactions and their total is greater than the amount of money that you had in your account. Check writing, ATM withdrawals, online bill payments, any transaction that reduces the money in your account can get you overdrawn.
When the transaction shows up, your bank has the choice of either paying for it or not. If it elects to honor the transaction regardless of the fact that you don’t have enough money to pay for it, it will charge you an overdraft fee. If, on the other hand, it decides that the check will not be paid and returns it for non-sufficient funds, it will then hit you with a bounced check fee.
The best way to minimize such fees is to manage your bank account so that you’re not in a situation where you overdraw it. There are many ways you can keep close track of your account balance. Record all your transactions when you make them, without forgetting that any banking fee you usually pay has to be accounted for.
You will have to be especially vigilant about electronic transactions. Your ATM withdrawals (including any fees), purchases paid for with your debit card, as well as online payments can easily be forgotten and must be recorded ASAP. In the same vein, regularly scheduled online bill payments for utilities, insurance, or loan payments should not be forgotten. Know your account balance and remember that some transactions may take a while to clear if you see it’s higher than what it should be.
Make it a monthly habit to check balance your accounts. In the time between getting account statements, you have several options for checking the rate at which your transactions are clearing: by phone with your bank, online, or at an ATM that doesn’t charge you a fee for checking your balance.
If, unfortunately, you find yourself having overdrawn your account, you best bet would be to deposit some money back into it as soon as you have cash available. Remember that you will also have to account for your bank’s overdraft fees. Some banks will take the opportunity to sell you on alternative ways to to cover overdrafts.
You will typically be offered two options. The first one is to link your current account with a savings account at the bank. Any transaction that would result in an overdraft triggers a transfer from your savings account to your checking account. Or you could be offered to set up an overdraft limit of credit with the bank. This would be a “line of credit” with the same application and eligibility requirements as a regular loan. The bank “allows” your account to go negative, up to your overdraft limit. You pay interest on the used portion of your line of credit, and there may be an annual maintenance fee for this credit line.
For more information on the fresh start checking account, visit my personal finance blog for tips, advice, and suggestions
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Tags: avoid overdraft fees, banking, eliminate overdraft fees, get rid of bounced check fees, money, money management, overdraft protection, Personal Finance
