What Is An Overdraft Fee and How Do You Avoid Them?

Author: Harvey Specter

Overdraft fees can be a real pain, especially if you are living paycheck to paycheck. Luckily, there are some easy ways to avoid them. 

Here is a comprehensive guide on how to keep your bank account safe from overdraft fees.

What are overdraft fees, and how can they be refunded?

An overdraft fee is the money the bank charges when you don’t have enough money to cover your expenses. They step in and add the difference for you. 

Overdraft protection programs are offered by banks to protect their consumers from failed transactions due to insufficient funds. The Federal Reserve has regulated these programs since 2011, as they put consumer protection at risk if banks can not easily refund overdrafts.

How to Avoid Overdraft Fees

Avoiding overdraft fees is possible if you can discipline yourself and work on your spending habit. Bank overdraft is not a feature to toy with as the money can pile put to an amount you never expected. Below are some proven tactics you can implement to avoid overdraft fees on your bank account: 

1. Make sure your checking account has enough money to cover checks and cash withdrawals. If there is a shortfall, your bank may flag your account and charge you an overdraft fee.

2. If you make a purchase using a credit card, make sure your bank doesn’t charge you an overdraft fee for making a purchase using a debit card.

3. Exercise extreme caution if your bank charges you an overdraft fee for failing to maintain a negative balance. 

4. Ask your bank to remove the overdraft feature from your account. However, removal depends solely on the bank’s policy.

5. If you don’t want to be charged an overdraft fee, it is best to keep your checking account balance above zero and write at least twenty checks each month or make twenty debit card purchases. 

If your checking account falls below zero, your bank may flag it and charge you an overdraft fee.

Purchase Management

Ensure you have enough money in your account before attempting to pay for a purchase via your card. Otherwise, your bank might step in and you will be charged an overdraft fee.

You can request that your bank stop writing checks against your account, but they may not always comply. If you do not want an overdraft fee feature, it is best to keep your checking account at a positive balance.

Conclusion

Overdraft fees can add up quickly and leave you with a hefty bill. To avoid that, practically follow the steps discussed in this article. These methods can assist you to reduce overdraft fees without any effect whatsoever. In the long run, the best way to avoid being charged is to keep your account positive and don’t buy a product the money in your account can not cover.