Discovering one or more overdraft fees on your bank account is often gut-wrenching. These pesky charges can accumulate at an alarming rate unless you proactively monitor and take steps to safeguard your hard-earned money.
Read on to learn more about how to avoid overdraft fees and the measures you can employ to ensure they won’t sneak up on you unnoticed.
What Are Overdraft Fees?
Overdraft fees are charges that financial institutions impose when you make a transaction that exceeds the balance in your checking account. That includes swiping your debit card, withdrawing cash from an ATM, or writing a check you don’t have the funds to cover.
The cost of overdraft fees varies by financial institution, but they typically range from $25 to $35 per transaction. Remember that they can add up very quickly if you’re unaware you’ve overdrawn your account.
Overdraft Protection: The First Line of Defense
One of the best ways to avoid overdraft fees is by enrolling in overdraft protection. This service links your checking account to another account or line of credit. When you make a transaction that exceeds the balance in your checking account, funds are automatically transferred from the linked account to cover the transaction.
At Best Reward Federal Credit Union, we offer two convenient ways to cover your overdrafts:
Share Savings Transfer—If an overdraft were to happen, the system first looks at the available funds in your Regular Share Savings to cover the deficit. We automatically provide this free service to our members!
Courtesy Pay—If there isn’t enough money in your Regular Share Savings to cover an overdraft, Courtesy Pay jumps in to save the day. This service is automatically made available to eligible members within 90 days of opening a Share Draft Checking account, up to a specific limit set by the credit union.
To take advantage of these beneficial programs, we require you to manually opt-in to cover overdrafts on ATM/Debit Card transactions. If you’re unsure if you’ve opted in, contact a branch for assistance.
Create a Budget and Stick to It
One of the most effective ways to avoid overdraft fees is by creating a budget, which will help you manage your money more effectively. Take time to understand your income along with your fixed and variable expenses.
Allocate a specific amount for each category such as rent, groceries, utilities, and savings. Sticking to a budget will ensure that you don’t spend more than you earn, which will help prevent overdrafts. Take advantage of our easy-to-use, printable Household Budget Worksheets to get started creating a budget.
Use Cash or Prepaid Cards
If you lose track of how much money you have in your checking account, consider withdrawing a fixed amount of cash for discretionary spending or using prepaid cards. Once you’ve spent the money or exhausted the funds on the prepaid card, you can’t spend any more, thus avoiding the risk of overdrawing your account.
Review Your Bank Statements
Regularly reviewing your bank statements can be an eye-opener. Sometimes we don’t realize how much we’re spending until we see it itemized on paper. Moreover, this practice helps to quickly identify any unauthorized transactions or errors that might affect your balance. Sign up or log in to view your e-Statement here.
Maintain a Buffer
Consider leaving a small buffer of money in your checking account to cover unexpected expenses. It acts as a safety net, decreasing the chance that an unplanned purchase or fee will cause your account to go negative.
Use Banking Tools and Technologies
Utilize the digital tools and technologies that your credit union offers. From budgeting tools within the mobile app to digital wallets you can load with a set amount of money, these technologies can significantly help manage finances and avoid overdraft fees.
Check out Best Reward’s Online Banking services and Mobile App offerings, which include Apple Store and Google Play.
Stay informed about your credit union’s policies regarding overdrafts and other fees. Be proactive and ask questions if something isn’t clear. Knowing how your bank handles overdrafts and what options are available is critical to avoiding fees.
Additional Tips to Avoid Overdraft Fees
Here are some extra-savvy strategies to keep those overdraft fees at bay:
Opt-Out of Overdraft Coverage—Overdraft coverage allows your bank to approve transactions even if you don’t have enough funds. By opting out of this service, transactions that exceed your balance will be declined, therefore you can’t accrue any overdraft fees.
Set Up Direct Deposit—By having your paycheck directly deposited into your bank account, you’ll have a constant influx of funds, reducing the likelihood of overdrawing your account. You can fill out the Direct Deposit application quickly and easily here.
Set Alerts for Low Balances—Many banking apps allow you to set up alerts that notify you when your balance falls below a certain amount. This is a great way to keep track of your funds and avoid unexpected overdrafts. Our Online Banking and Mobile App tools can keep you informed of your balances in real-time, so you don’t overdraw on your account.
Join a Credit Union You Can Trust—Credit unions are known for having lower fees and better customer service than traditional banks. Joining Best Reward Federal Credit Union offers you a wide range of benefits and personalized service while providing tailored solutions to grow and safeguard your wealth. Just click here to join today!
Take Action Now to Avoid Costly Overdraft Fees
Overdraft fees can take a toll on your finances, but with careful planning and tools like Share Savings Transfer and Courtesy Pay, you can avoid these costly charges. By being proactive and managing your accounts wisely, you'll keep more of your hard-earned money in your pocket.
Click below to learn how Best Reward Federal Credit Union can help you avoid those pesky overdraft fees.
See Our Overdraft Protection Options & Benefits