It is a known fact to all of us that the banks and credit uniond where we open accounts to deal with our money are businesses and businesses need to earn money to succeed and grow.
They make money through different sources and one of them is the fees they charge on their customers. All these fees range from ATM charges to maintenance and transaction charges and even the most responsible bank customer can fall prey to a fee every now and then. And the most appalling and vexed is the overdraft fees.
Let us see what Overdraft fees are –
Well, these are the fees which are charged on you when you spend more money than you actually have in your checking account. This spendings include writing a check that would otherwise bounce, swiping your debit card when you have insufficient funds to cover the purchase or when you are withdrawing more cash than you have through an ATM.
Overdraft fees are only incurred if you have opted for the overdraft protectin and it may sound useful as it can save you from the embarresment when you card gets declined during a purchase.
So, if there are so many useful sides of overdrafting, you might wonder what is the problem in using it?
The answer to this question is simple.
Overdraft Fees are expensive –
The average cost of an overdraft fees as recorded in 2020 was nearly $33.45 and in addition to that,many financial institutions charge $2-$5 per day until you have money back in your account.
Many banks allow you to overdraft more than once per day which implies to the fact that you could be hit with multiple charges in a single day before you even realizing it.
How to avoid Overdraft Fees –
There are a few ways by which you can avoid this unnecessary and expensive fees with minimal hustle. Let’s get along with those-
1.Opt out of Overdraft Protection – If you do not know if you’re signed up for overdraft protection then first thing you need to do is contact your bank or credit union.If you are,then ask for opting out. But as you opt out, you should be ready to get your card declined if you donot have sufficient balance to make a purchase. So, what can you do to avoid that No Sufficient Fund fees? Well,the next few tips explain it.
2.Monitor your account regularly – Most of the bank account users now a days are using mobile apps to monitor their account and the tradition of balancing the checkbook after every transaction is long gone. Though,some of the users still perform it and the practice is not obsolete yet. As you are going to make a purchase just pull out your mobile phone before the payment and check if you have the sufficient balance to make the purchase and you are safe. It takes a fraction of seconds and the servieces are right at your fingertips.
3.Set up automatic payments for recurring bills – while setting automatic payments for bills do not forget about them you will be able to control the exact date that the money can be withdrawn from your account and hence you can keep a track as to when you have how much money in the account and do remember to set monthly reminders on your phone’s or Pc’s calender so thar you can be notified beforehand.
4.Set up the account with low balance alerts- go to your online banking website and update the settings to get notified by the bank when you have money less than a limit set previously by you and as you get notified,stop yourself from making payments through your card until or unless you hav deposited funds back in the account and the bank has processed them.
5.Opt for banks with no overdraft fees – With the increase of online banks there is a increasing competition to the market . That is the reason why newer online-only banks which are making entries to the market are offering no overdraft fees to attract the customers and grow their businesses swiftly. All you need to do on your part is do the research and figure out which online bank is giving the best services and grab the opportunity.
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