5 Ways to Avoid Overdraft Fees

With our busy schedules, it can be easy to lose track of our checking account transactions. If you happen to spend more money than you have in your account, you might be charged a fee. This overdraft fee, often called a Non-Sufficient Funds (NSF) fee, can get quite expensive. Americans paid more than $11 billion in overdraft fees last year alone! These five tips will help ensure you always keep enough money in your checking account and avoid overdraft fees:


1. Turn Off Automatic Payments

Automatic payments are a convenient way to pay, as you don’t have to manually go through the payment process every month. However, automatic payments also can make it easy for you to forget about your monthly bills and can make it difficult to gauge how much money you have to spend. You might check your account one day and be happy with where you’re at, but then could forget that your automatic student loan payment is being taken out the next day. If you withdraw too much money on top of your monthly student loan payment, there is potential to overdraw. Retaining complete control of when you make payments, may be helpful in staying mindful of the money going in and out of your account.

2. Setup Alerts for Low Balances

If you aren’t consistently checking your account balances to make sure they aren’t too low, set up alerts to let you know when they are. Automate the process by either having emails or texts sent to you, notifying you when your account goes below a specific threshold that you set.


3. Opt Out of Overdraft Coverage

According to a report from the Consumer Financial Protection Bureau, debit card transactions cause more overdrafts than any other transaction type. If you find that you are paying more overdraft fees than you’d like to, consider opting out of overdraft coverage. Without overdraft coverage, any transactions you attempt to make will be declined if you don’t have sufficient funds in your account. Buyer beware: there is sometimes a fee that accompanies getting declined, so be sure to check what the fee is before opting out of overdraft coverage. The benefit is knowing when you’re overdrawn and avoiding additional overdraft fees by not using your card.

4. Link to Another Account

If you have another savings or checking account at the same credit union, you may have another option of linking the accounts as a safeguard for overdraft protection. By linking your checking account to another account, you can transfer funds into your checking to cover a transaction in the event of any shortfalls. Again, be sure to check if there is a fee in the event of a shortfall.

5. Watch Your Accounts

Check your account balances weekly, or even more frequently if you can. You can keep an eye on your balances and see when they’re getting too low. Be sure to review your monthly statements as well, looking for any fraudulent transactions. The sooner you detect any fraud, the better. While many check their accounts before big purchases, it’s always a good idea to check before small transactions as well. According to the Consumer Financial Protection Bureau, most overdraft fees from debit cards happen with a purchase of $24 or less. Checking your accounts is now easier than ever with the latest and greatest online banking and mobile apps!

What do you do to stay on top of your spending? I’d love to know!

Take care,