The thought of drawing money from a checking account when the balance is below zero wouldn’t occur to most people. It happens, however, and most often unintentionally.
One of the problems that come with an “overdraft” is the fee. Overdraft fees are charged when your bank covers you if you use a debit card or write a check for more than what is in your account. But fees can add up quickly if you continue to make overdrafts.
The good news is that overdrafts are avoidable. Here are five quick tips that will help you limit or avoid overdraft fees.
1. Always update your check register and budget
Keeping a check register and updating your budget are two important ways to avoid overdrafts. Be sure to record all of your debit card and ATM transactions. An easy way to keep track of your monthly budget and spending is with a Monthly Budgeting Sheet from Peoples Bank, which allows you to plan ahead while knowing exactly how much money you have in your account.
2. Always have an account cushion
Keeping a cushion of money in your checking account is an easy way to avoid overdrafts – which are most often small amounts of money in the first place. Even setting aside $100 should cover you in the case of an overdraft.
3. Coordinate joint checking accounts
It can be easy to accrue overdraft fees if the co-account holders don’t communicate about withdrawals or have different spending priorities. Couples can agree to limits on spending and should have a system where both people are recording payments so the other person can see them.
4. Be careful with automatic payments
Setting up automatic payments for larger bills such as insurance, utilities, and loans, is an easy way to go and helps limit the number of checks you have to write each month. But they can also be a cause of overdrafts if you don’t record them in your check register each time a payment is processed.
Direct deposits into your account – such as your paycheck – will help ensure that you have enough money in your account at all times.
5. Transfer money quickly after an overdraft
If you know that a low balance has caused an overdraft, add money to the account as soon as possible. You may avoid overdraft fees altogether, or at the least, you’ll avoid additional fees that can come with leaving a negative balance for too long.
At Peoples Bank, we offer a variety of checking and savings accounts to best fit your needs. We also use an online and mobile app to help you keep track of your balance. Contact one of our professionals today.