An overdraft fee is charged by a bank when you send more money than you actually have in your account. Spending more money than you actually have can cause a negative balance. With that said, an overdraft fee is the fee that the bank charges you for borrowing money from it for a potential transaction with an empty account.
Here are some ways you can avoid bank overdraft fees.
Regularly Monitor Your Bank Account
One of the best ways to avoid the overdraft fee comes down to keeping your bank account in check, especially before withdrawing money or purchasing something. You can easily lose track of your bank balance due to setting up autopay, subscriptions, or loans. You should know that if you fail to check your account regularly, potential fraudulent transactions or even unauthorized transactions can go undetected.
The best you can do is to double-check your bank balance before swiping your card.
Choose The Right Bank Account
To avoid overdraft fees, you might want to choose a bank account or an account with banks with no overdraft fees, so you can overdraw the amount you need without getting penalized. You might want to do your research and opt for a fee-free account.
For instance, SoFi Bank charges you no overdraft fees. Typically, banks that charge no overdraft fees decline transactions that might lead to an overdraft. Even if your potential payment gets approved, you won’t have to worry about any fees. However, you will be responsible for depositing money into the account so you can get your balance back.
Sign Out of An Overdraft Coverage
The next best thing you can do is to opt out of overdraft coverage. If you make a debit card purchase on your account and you overdraw an amount, your respective financial institution fronts you the amount to complete the transaction. However, you have to pay a fee to avail yourself of this convenience. By opting for an overdraft coverage, your transaction will be automatically declined. With that said, you might want to reach out to your bank and ask them to get you off the list for overdraft coverage.
Subscribe to Low-Balance Alerts
Another way you can avoid the overdraft fee is by setting up alerts that remind you of having a low balance. Many bank accounts provide bank alerts that you can use to your benefit by receiving notifications of a low balance. You can opt to receive those alerts through emails, texts, and even push notifications. These alerts will keep you mindful about money dipping below a specific account.
You can also get alerts for unusual account activity, which can make you aware of fraudulent transactions.
Final Thoughts
Although you only spend the amount that you already have in your bank account, sometimes you might cross the line, as things tend to happen. For instance, you might pay a sudden bill while paying your mortgage or student loan, which can result in a negative account balance. In such cases, paying the amounts during the grace period of your bank can be a better way to waive the overdraft fee. However, it might be better to switch to another bank account that comes without an overdraft fee.
