Getting rid of overdraft and bounced check fees is a really important step if you happen to be one of the people who is at odds with this problem. Not only is this a very expensive problem, it should be regarded as a red flag for the very serious threat to your financial future because it denotes a poor grasp of basic money management.
What's an overdraft? An overdraft is simply the negative balance that shows up on your account balance after you're made one or several transactions and their total is superior than the amount of money that you had on your account. Check writing, ATM withdrawals, online bill payments, any transaction that reduces the money in your account can get you overdrawn.
Your transaction puts your bank in a position where it has to decide whether whether or not it's going to pay the amount. Either way, the bank will assess you a fee. If the amount is paid for although you didn't have enough funds, the bank will assess you an overdraft fee. In case the bank decides that the check should be returned unpaid, it will assess you a bounced check fee.
Getting rid of those fees means simply that you have to keep a tight grip on your account balance to avoid negative balances. The best way to achieve this is to keep track of how much money you have by keeping your account register up-to-date. Write down all your transactions as soon as they happen. And don't forget to subtract any bank fees that you incur.
Be on the lookout when it comes to transactions where you don't have to write a check or pay with cash: ATM withdrawals and fees, debit card purchases, and online payments just to name a few. Online bill payments on a monthly basis for utilities, insurance, or loan payments should also be thrown into the mix. Always be on top of your account balance and in case it shows a higher amount than what it's supposed to, be careful and look for transactions that haven't cleared yet.
Review your account statements each and every month. Between statements, finding out which payments have cleared is as simple as calling your bank to get your current balance, checking it online, or getting it from an ATM (assuming that you won't get charged just for checking).
In the unfortunate case where you account is negative, make it a priority to deposit some money into it so as to have a positive balance once again. The bank will deduct its overdraft fee from the account, so keep that in mind when determining how much to deposit. At this time, you might also be offered other ways to cover any future overdrafts.
You will typically be offered two options. The first one is to link your current account with a savings account at the bank. Any transaction that would result in an overdraft triggers a transfer from your savings account to your checking account. Or you could be offered to set up an overdraft limit of credit with the bank. This would be a "line of credit" with the same application and eligibility requirements as a regular loan. The bank "allows" your account to go negative, up to your overdraft limit. You pay interest on the used portion of your line of credit, and there may be an annual maintenance fee for this credit line.
What's an overdraft? An overdraft is simply the negative balance that shows up on your account balance after you're made one or several transactions and their total is superior than the amount of money that you had on your account. Check writing, ATM withdrawals, online bill payments, any transaction that reduces the money in your account can get you overdrawn.
Your transaction puts your bank in a position where it has to decide whether whether or not it's going to pay the amount. Either way, the bank will assess you a fee. If the amount is paid for although you didn't have enough funds, the bank will assess you an overdraft fee. In case the bank decides that the check should be returned unpaid, it will assess you a bounced check fee.
Getting rid of those fees means simply that you have to keep a tight grip on your account balance to avoid negative balances. The best way to achieve this is to keep track of how much money you have by keeping your account register up-to-date. Write down all your transactions as soon as they happen. And don't forget to subtract any bank fees that you incur.
Be on the lookout when it comes to transactions where you don't have to write a check or pay with cash: ATM withdrawals and fees, debit card purchases, and online payments just to name a few. Online bill payments on a monthly basis for utilities, insurance, or loan payments should also be thrown into the mix. Always be on top of your account balance and in case it shows a higher amount than what it's supposed to, be careful and look for transactions that haven't cleared yet.
Review your account statements each and every month. Between statements, finding out which payments have cleared is as simple as calling your bank to get your current balance, checking it online, or getting it from an ATM (assuming that you won't get charged just for checking).
In the unfortunate case where you account is negative, make it a priority to deposit some money into it so as to have a positive balance once again. The bank will deduct its overdraft fee from the account, so keep that in mind when determining how much to deposit. At this time, you might also be offered other ways to cover any future overdrafts.
You will typically be offered two options. The first one is to link your current account with a savings account at the bank. Any transaction that would result in an overdraft triggers a transfer from your savings account to your checking account. Or you could be offered to set up an overdraft limit of credit with the bank. This would be a "line of credit" with the same application and eligibility requirements as a regular loan. The bank "allows" your account to go negative, up to your overdraft limit. You pay interest on the used portion of your line of credit, and there may be an annual maintenance fee for this credit line.
About the Author:
Overdraft fees got you in ChexSystems? Read my report on banks that do not use chexsystems on Money Galaxy, a personal finance blog I contribute to.
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