Some Ways To Avoid Overdraft Fees

Overdraft fees can eat up the money in your bank account, cause your checking account to become overdrawn and lead to bad credit.

Many people get their bank accounts emptied out and charged off because of overdraft fees. Today’s overdraft fees can be up to $100.

Banks are quick to charge overdraft fees because they make money off of them. Many banks will let you use your debit card when your account is empty in order to run up overdraft fees.

Set Your Bank Account to Avoid Overdraft Fees

The first thing you should do is to see if you can set bank account so that your debit card stops working the moment your account is empty or overdrawn. This can be embarrassing at stores or when making purchases but it can prevent overdraft fees.

If your bank won’t do this for you, find another bank that does. Local community banks or credit unions might give you this feature. If no bank in your area will do this check out internet bank accounts that offer prepaid Visa and MasterCard Debit cards. Account Now is a really good bank that offers this feature.

Use Internet Banking

Modern computerized banking moves at the speed of light. This means that neither your paper checkbook or the paper statement issued by your bank maybe a true representation of what’s in your account. You could think your account has lots of money when it is really overdrawn.

Instead use the internet banking feature offered by almost all banks these days. This lets you see the same computerized information that your banker sees. That means you can see how much money is really in your account and what checks have cleared.

A good rule of thumb is to check your bank account on the internet everyday. That way you can see if there’s a problem and deal with it.

Be Careful With Bank Overdraft Protection

Your bank may try to sell you “overdraft protection” for your checking account. You should be leery of this feature because it can run up your credit card bills or eat up your savings account.

Overdraft protection works by linking your checking account to a credit card or savings account. With a credit card this protection overdrawn checks are charged to the credit card. If a lot of checks or payments go through this can quickly put several hundred dollars of extra charges on your credit card.

Another form of overdraft protection is linked to your savings account. This protection covers overdrawn checks with money with your savings. The problem with this protection is that it can drain your savings if a lot of overdrafts come in.

Overdraft protection maybe a good deal for your bank but a bad deal for you.

Challenge Overdrawn Check Fees

If you see an overdraft or other fee on your checking account that you think is unfair or illegitimate challenge it. Call the bank or go to the bank and ask to see the manager or a personal banker. Then ask them to remove that fee from your account. In many cases the bank will eliminate the fee and pay back any money taken for it.

Overdraft fees can lead to bad credit but there are ways to avoid or eliminate them.