How To Avoid Overdraft Fees

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How you spend your money can significantly impact many aspects of your life, including your credit and finances. When your spending habits push your account into the negative, your credit union or bank will charge you an overdraft fee. According to recent US data, the average overdraft fee is around $27, and this amount can accumulate for as long as you continue to buy. Paying for overdraft fees isn't particularly convenient, especially when you are trying to save money and build a financially secure future. Fortunately, you can employ the following strategies to avoid overdraft fees.

Avoid signing up for overdraft coverage 

Signing for overdraft coverage is not ideal if you want to avoid overdraft fees. Instead, it’s best to opt out by telling your bank not to cover your transactions when you don't have enough cash in your account. That means you no longer attract fees for those one-time debit card swipes or ATM withdrawals that put you in the red. However, this doesn't mean your checks or regular automatic payments will bounce, as those can still go through. So, take control of your banking by avoiding overdraft coverage, and your wallet will thank you later. 

Keep an eye on your account balances 

Regularly check your accounts to ensure your balances aren't too low. According to the Consumer Financial Protection Bureau, the majority of overdraft fees occur when your balance is around $24. Fortunately, there are simple ways to easily check your balances including signing up for mobile banking. With the app on your phone, you can check your account on the go. This way, you can quickly transfer money or delay spending until you have sufficient money in your account. 

Consider other forms of credit 

Life happens, and sometimes you need money to cover some emergency expenses. The good news is there are other forms of credit, including instant or same-day loans, that allow you to get quick cash with no or little interest compared to your overdraft fees. For instance,  an installment loan can be a more convenient way to cover your expenses quickly while enjoying faster loan repayment options with fewer fees. If you’re interested in this, you can check the internet for online installment loans to avoid paying expensive overdraft fees. 

Consider banks with generous overdraft policies 

Not all banks or credit unions are solely focused on charging you with overdraft fees. Some of them are actually less strict about it. Therefore, if you're tired of getting debited with those charges, it might be time to choose a new banking or credit facility. You will be surprised to know that many institutions offer zero overdraft fees. That means you can dip into the red without being slapped with a penalty. However, there’s a catch; you have to clear the negative balance within 30 days, or you might be denied this offer. If you’re thinking about making the switch, you only need to ensure you’re ready to play by their rules, and you’ll bid goodbye to avoidable overdraft fees.