Savings Tip: The Best Way To Avoid Overdraft Fees


Overdraft fees:  they, literally, can have you seeing red. It happens when your checking account balance is no longer in the black because you’ve lost track of purchases, forgot to cover a check, or blanked out on how much you owe whom. Banks can charge an overdraft fee if you don’t have enough funds in your account to cover a check — and you can be assessed a fee more than once if you continue to write checks based on insufficient funds.

Keep in mind the following strategies and you may be able to avoid costly fees and considerable frustration. 

Regularly Check Your Account Balances 

Check your accounts at least weekly to make sure your balances aren’t dipping too low.  

According to the Consumer Financial Protection Bureau, most overdraft fees from debit cards occur with transactions of $24 or less. You can check balances quickly and easily using a mobile app or by calling the bank, stopping in at your local bank branch, or visiting an ATM. 

Set Up Automatic Alerts 

Money can slip through your fingers if monitoring your account balance slips your mind. Check into automating the process of checking on your funds by setting up email or mobile text alerts that notify you when an account falls below a certain amount that you preset. 

Opt Out Of Overdraft Coverage 

Banks can decide to either cover or reject a transaction that would result in a negative balance but you can control whether or not you’re enrolled in an overdraft coverage program. If you opt out of the program your bank can’t cover one-time debit card or ATM transactions but neither can it charge an overdraft fee on these transactions.

Banks can, however, cover checks and recurring debit transactions without your permission. Just remember that without overdraft coverage, bank transactions get declined in the case of insufficient funds. 

Deposit Or Transfer Funds Quickly After An Overdraft 

Time is money, as the saying goes. The same thinking applies to overdrafts:  If a low balance has resulted in an overdraft there still may be time to prevent an overdraft fee. Ask if your bank has a daily deadline for adding money to an account in order to correct a negative balance that same day and avoid fees.

Even if you miss the cut off, transferring money into the account as soon as possible can avoid the accumulation of additional fees.  

Get A Prepaid Debit Card 

When it comes to cash, as with everything else in life, it helps to know your limits. Much like a standard debit card, prepaid debit cards allow you to deposit, withdraw, and spend money but they aren’t linked to checking accounts.

This type of card usually doesn’t have overdraft services or related fees but they can assess fees for declined transactions.  


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Kat Begonja

Kat Begonja

Lover of animals, writing and all things Croatian!

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