You will be charged an overdraft fee if you purchase something that costs more than the money you have in your checking account. This is called an overdraw and will lead to a negative balance. You will be charged a fee again and again, in case you make another purchase using the same card by mistake. Here are some ways to avoid an overdraft fee.
Refuse Overdraft Coverage
According to the Consumer Financial Protection Bureau, debit card transactions cause more overdraft fee than any other type of transaction. When you opt out of overdraft coverage, the payment will get declined if there isn’t enough money when you make a purchase. And no one charges a fee for insufficient funds or declined debit card attempts. However, this applies only to debit card transactions and not to checks and other recurring debit transactions.
Keep An Eye On Balances
Have the habit of checking the bank balance frequently to know how much money you have when you going to purchase something. You can check the balance on the online banking portal, the mobile app, or request it over a phone call. You can also visit an ATM or a branch to check your balance.
Set Up Alerts
You can set up email or mobile alerts to be informed whenever the amount is nearing the minimum balance.
Deposit As Soon as Possible
You can escape an overdraft fee if you transfer the necessary funds to your account immediately. Some banks or providers give you some time to transfer money to make up for the balance on the same day to avoid fees. You can transfer the funds even if you missed the deadline so that you can avoid other fees that come with overdraft fees. Moreover, leaving the account balance negative for several days will extend the overdraft fee.
Link to a Savings Account
An overdraft protection transfer service will link a checking account to a savings or credit account at the same bank. If the checking account does not have enough money to complete a transaction, the required balance will be transferred from the linked account. You can not only complete the transaction but also avoid overdrawing. The overdraft protection comes with a fee but it’s less than overdraft fees. You can also link a credit account, but you’ll be charged interest on the overdrawn amount and along with a transfer fee.
Alternatives
You can deposit the desired amount to these prepaid debit cards and spend them. These cards don’t have overdraft services and fees; however, they might charge for declined transactions. Nevertheless, it can be a good alternative to regular debit cards.
