Preventing overdraft and bounced check fees is actually rather easy. There are just a few things you should do to ensure you know how much money is really in your account, and a few tips for keeping these fees from affecting your account. Follow these simple steps and tips, and you shouldn’t have to worry about overdrafts or bounced check fees again.
Most banks give you online access to check your available balance. The majority of bank customers go by this available balance, and typically it is right. There are times when the available balance is higher than your actual balance. Sometimes the bank waits for authorization from merchants before debiting the account, or sometimes the value of the debit increases. Don’t exclusively follow the available balance. Check the balance to ensure it reflects all of your current purchases.
Make a Buffer
Creating a buffer in your account is a great way to ensure you avoid overdraft fees. A buffer is a certain amount of money you add into the account, but you never touch it. Most people make a buffer of $100. Keep the $100 in there, and never withdraw or use it.
This avoids an overdraft by keeping extra money in your account. If the overdraft is more than your buffer, then you will still have to pay the fee. At the same time, this is one of the best ways to keep yourself from actually using too much money.
Overdraft protection can be a good way of avoiding bounced check and overdraft fees. You start by setting up a secondary account. Usually this is a savings account or a credit card. If the primary account is overdrawn, then it will dip into the secondary account.
Overdraft protection may have a monthly fee, and you may be charged a smaller fee for having to dip into the secondary account. Research the applicable fees to see if the protection is worth it.
No Overdraft Fees
It may seem backwards, but banks offer overdraft fees as a service. They allow your debit card or check to go through, but they charge you extra if you go over your limit. If you don’t mind having your debit purchase immediately blocked, then you can opt out of overdraft fees. This means that you will not have any overdraft fees, except in certain situations, but your card will be immediately declined if you try to use too much.
Talk with your bank about opting out of these fees. You will still have to pay fees if using a check without a proper balance, and some purchases start out as a $1, like gas purchases, but they inflate to their real amount once the purchase has cleared. If the purchase clears and you don’t have enough money, then you will still have an overdraft fee.
Line of Credit
Getting a line of credit is similar to getting overdraft protection. Fees are usually attached, but they tend to be slightly lower than overdraft protection fees. This also provides you with more protection because the line of credit can often absorbs a higher debit. Only certain banks provide this, and you often need to have a good credit score to get a line of credit.
Just Use Cash
Perhaps the easiest way to avoid overdraft and bounced check fees is to use cash. Sometimes you will need to overdraft if you are in a financial crunch, but using cash will ensure you don’t have any fees. If possible, try shopping exclusively with cash.
Overdraft and bounced check fees can be annoying, and they can really put a dent in your account. Just follow these simple methods for avoiding fees and you shouldn’t be bothered by the bank anymore.