How to prevent an overdraft - 7 things you can do
- By Larry Donaldson
- Published 03/16/2010
- Finances
- Unrated
How to prevent an overdraft - 7 things you can do
Life should be simple. At least, that is what most of us would like to believe. As we go from being kids to young adults and then to being full-fledged 20, 30, 40-somethings and beyond, we realize more and more than any misconceptions we had in childhood about life being simple just aren't true.
In its simplistic, comic-book form, life looks pretty easy: you get an education, get a job, get married (or not), and have your fun on weekends, nights and holidays. However, the "novel" of life is written with a mind-boggling number of characters, plot-twists, and stuff you need to know just to make it through each day.
Banking: Things Just Got Complicated
Apart from that little thing known as "romantic relationships" (which is another story altogether), probably the most complex thing about managing day-to-day life as an adult is your banking life. Your choice of banks determines a host of things about your banking experience, including:
a. the fees you pay
b. the (in)convenience of your bank's ATMs
c. how close your bank is located to your home and place of business
b. did I mention the fees you pay?
Each bank has different programs in place, and therefore the type of complexity that you face with your bank will differ depending upon where you bank. However, one thing that most bank customers face in common today is the reality of overdraft fees.
Overdraft Fees and Banking
Arguably, the biggest complaint customers consistently make today about their banking experience concerns the overdraft fees they pay regularly to their bank. If a check bounces, a bill is paid, or a debit card charge is made, you are charged an overdraft fee. This sounds like common sense: after all, shouldn't each of us be a bit more responsible with our banking?
Well, it's not quite that simple. You see, even those of us who are very careful about our banking habits can run into situations whereby we have to pay overdraft charges. And, those charges can get expensive! After all, a single overdraft can cost up to $35 at most banks.
How to Prevent an Overdraft
If you have been paying too much in overdraft fees lately, here are 7 tips for preventing them in the future:
1. Keep at least $100 in your account at all times.
2. Link your checking account to an overdraft savings account, from which money will be automatically transferred if you overdraw your checking account.
3. Set up a second checking account that links to your main checking account. Keep a cash reserve in it. When your main account's balance dips below $100, transfer money from your backup account into your main account.
4. Check your account balances and upcoming online bills & checks twice per day.
5. Go through your entire account with a fine-toothed comb at least once per week to make sure there are no outstanding checks that show as already having been paid but whose amounts are not yet deducted from your balance.
6. Balance your checkbook, bills and other charges in a paper notebook that you carry around with you.
7. Leave your bank and switch a no-overdraft-fee bank. Although few and far between, these banks are out there and looking for new customers like you. And, they won't ever charge you an overdraft fee - even if you overdraw your account!
Banking has gotten more complex over the years. Luckily, you now have more options than ever for avoiding paying even one penny in overdraft fees in the future.
In its simplistic, comic-book form, life looks pretty easy: you get an education, get a job, get married (or not), and have your fun on weekends, nights and holidays. However, the "novel" of life is written with a mind-boggling number of characters, plot-twists, and stuff you need to know just to make it through each day.
Banking: Things Just Got Complicated
Apart from that little thing known as "romantic relationships" (which is another story altogether), probably the most complex thing about managing day-to-day life as an adult is your banking life. Your choice of banks determines a host of things about your banking experience, including:
a. the fees you pay
b. the (in)convenience of your bank's ATMs
c. how close your bank is located to your home and place of business
b. did I mention the fees you pay?
Each bank has different programs in place, and therefore the type of complexity that you face with your bank will differ depending upon where you bank. However, one thing that most bank customers face in common today is the reality of overdraft fees.
Overdraft Fees and Banking
Arguably, the biggest complaint customers consistently make today about their banking experience concerns the overdraft fees they pay regularly to their bank. If a check bounces, a bill is paid, or a debit card charge is made, you are charged an overdraft fee. This sounds like common sense: after all, shouldn't each of us be a bit more responsible with our banking?
Well, it's not quite that simple. You see, even those of us who are very careful about our banking habits can run into situations whereby we have to pay overdraft charges. And, those charges can get expensive! After all, a single overdraft can cost up to $35 at most banks.
How to Prevent an Overdraft
If you have been paying too much in overdraft fees lately, here are 7 tips for preventing them in the future:
1. Keep at least $100 in your account at all times.
2. Link your checking account to an overdraft savings account, from which money will be automatically transferred if you overdraw your checking account.
3. Set up a second checking account that links to your main checking account. Keep a cash reserve in it. When your main account's balance dips below $100, transfer money from your backup account into your main account.
4. Check your account balances and upcoming online bills & checks twice per day.
5. Go through your entire account with a fine-toothed comb at least once per week to make sure there are no outstanding checks that show as already having been paid but whose amounts are not yet deducted from your balance.
6. Balance your checkbook, bills and other charges in a paper notebook that you carry around with you.
7. Leave your bank and switch a no-overdraft-fee bank. Although few and far between, these banks are out there and looking for new customers like you. And, they won't ever charge you an overdraft fee - even if you overdraw your account!
Banking has gotten more complex over the years. Luckily, you now have more options than ever for avoiding paying even one penny in overdraft fees in the future.
Larry Donaldson
For a complete list of banks without overdraft fees in your area, visit:http://www.squidoo.com/banks-without-overdraft-fees .
View all articles by Larry Donaldson