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Most Effective Ways To Avoid Overdraft Fees

Overdraft fees happen when a person attempts to purchase an item that exceeds the funds in their checking account. Your bank will cover the purchase for you at the time but will charge an overdraft fee with an expensive interest rate automatically.

These fees can be costly and frustrating. However, users can avoid them with just a few simple tips.

Unenroll From Automatic Overdrafts

Banks design their overdraft services to be helpful tools that users can rely on if they need to make an essential purchase while waiting for funds to clear. However, banks don’t require their account holders to opt into automatic overdrafts.

Opting out of an automatic overdraft service will mean that your bank can reject the transaction if you attempt to make a purchase without the necessary funds. The positive is that your account will not slip into the negative, and your bank will not charge you an overdraft fee.

Closely Monitor Bank Account Information

Though it might sound simple, one of the easiest ways to avoid overdraft fees is by checking your bank account balance regularly every time you’re planning to make an expensive purchase.

Most banks and credit unions have easily accessible websites and mobile applications that allow users to check their account balances whenever they need. Using those features to your advantage and ensuring that your funds are what you expect them to be can help you avoid overdraft fees.

Transfer Funds With Direct Deposit

Most people will wait to make large purchases until they have received money from their employer, but occasionally, a bank will not receive the payment when they are supposed to. Unfortunately, that delay in funds can often result in accidental overdraft fees.

One easy way to avoid these overdrafts is by transferring payments using direct deposit, which will often allow your bank to receive the money from your employer instantly. That way, you can access your paycheck right away rather than wait for your new funds to clear.

Pay With a Debit Card

Most banks only charge overdraft fees when a person attempts to make a payment with a check. However, for attempted purchases with a debit card, the transaction will simply not go through when a person’s bank account has insufficient funds for that purchase.

In addition, paying with cash during transactions when you are unsure of your bank account status can be a great way to avoid accidental overdrafts.

Link to a Separate Account

While not a universal standard, most banks will allow you to link your primary checking account to a secondary source of funds, such as savings, credit, or secondary checking accounts.

The option to link accounts in this way exists as a layer of protection against overdraft fees. Rather than being charged an overdraft fee when you attempt to make a purchase beyond the funds in your primary account, your bank will simply pull money from the linked bank account.

Since the additional account is your own money, your bank will not charge you any fees if you need to use funds from that account for a purchase.

In Conclusion

Overdraft fees can be costly and unexpected annoyances but are easy to avoid with proper use of resources and a basic understanding of your bank account.

By keeping regular watch over how much money is in your bank account or switching your primary payment and check deposit method, you can drastically lower the instances of overdraft fees. And by taking full advantage of your banking options by opting out of overdrafts or linking your checking account to a separate source of income, you can avoid these fees altogether.

About the Author

Pablo Espinal is a father, online marketer and web designer specializing in advertising and based out of the Brooklyn NY area. You can see more of what he does here: