Smart banking tips to help you avoid costly overdraft fees
What's the story
Managing a bank account the right way is essential to stay away from expensive overdrafts.
Overdraft fees can accumulate quickly, putting a dent in your finances.
However, by practicing mindful banking, you can keep better control of your finances and avoid unnecessary charges.
Here are some practical tips for managing your bank account wisely. It helps you stay on top of your finances and avoid the pitfalls of overdraft fees.
Regular checks
Monitor your account regularly
Regularly checking your bank account is critical to avoid overdrafts. By checking your balance regularly, you can ensure that you have enough money for future transactions.
Most banks provide mobile apps that can make it easier to keep track of your spending and balance in real-time.
You can also set up alerts for low balances or large transactions to stay updated about your account.
Automated income
Set up direct deposits
Setting up direct deposits means your income automatically gets credited into your bank account on payday.
This mitigates the risk of delays in manual check deposits and keeps your account cash flow steady.
With direct deposits, you are less likely to deal with situations where insufficient funds lead to overdrafts.
Financial planning
Create a budget plan
Creating a budget plan helps you allocate funds for different expenses in an orderly manner.
By knowing exactly how much money you have for bills, groceries, savings, and other needs, you minimize the risk of overspending and overdrawing on your account.
A well-structured budget helps you prioritize essential expenses while keeping discretionary spending in control.
Safety net
Link accounts for overdraft protection
Linking a savings account or another checking account as an overdraft protection measure provides an extra layer of security against overdrafts over time.
If there are insufficient funds in the primary checking account, banks will transfer money from the linked account automatically to cover transactions without charging an overdraft fee.
Fee avoidance
Opt out of overdraft coverage
Opting out of standard overdraft coverage means that instead of letting transactions go through that exceed your available funds (and charging you fees), banks will decline such transactions at no cost when using debit cards or ATM withdrawals, unless you authorize otherwise.
Customers can do this through written consent forms provided by financial institutions offering these services under specific terms agreed upon mutually.