With bank fees rising and budgets growing tighter, it’s more important than ever before to monitor your checking account carefully. A single overdraft fee can derail your monthly spending plan, leaving you with less cash for the bills you need to pay. While online checking accounts offer an easy way to manage your money, it’s still up to you to spend consciously. Here are five steps you can take to avoid overdraft fees and retain more of your money.
1. Use an Overdraft Protection Service
Without a doubt, an overdraft protection service is one of the best ways to prevent yourself from incurring heavy fees. Generally, an overdraft protection program links your primary checking account to another account, such as a savings fund or credit card. When your primary account is out of money, the balance of your purchase is deducted from or charged to your secondary account. The bank won’t give you an overdraft fee, and you’ll still be able to make your purchase.
2. Check Your Account Balance Online
You can also avoid overdraft fees by regularly checking your account balance. Online checking accounts are especially popular because they allow you to track your spending throughout the day from anywhere in the world. When you think you might be close to the bottom of your account, determine your available balance before spending. If your account is almost empty, you can simply wait to make your purchase. You can also transfer funds or use the overdraft protection service to avoid fees.
3. Track Your Daily Spending
If you can’t check in with your online account while you’re out shopping or running errands, you should be sure to track your spending as you go. Keep track of any purchases you make during the day and deduct them manually from your total balance. Some people use checkbook registers to balance their accounts, while others record purchases through mobile applications. As long as you’re aware of how much you’re spending, you can use any of these methods to track your finances and avoid overdraft fees.
4. Keep a Buffer in Your Account
Despite your best efforts, you might still incur an occasional overdraft fee. However, you can keep a small buffer in your account to protect yourself from spending too much. You don’t need a large buffer, as you can benefit greatly from keeping an extra 100 dollars in your account and resolving to never let your balance drop below that amount. If you mistakenly spend too much, the buffer will protect you and you won’t receive any overdraft fees.
5. Watch for Overdraft Notices
Finally, it’s important to keep an eye out for overdraft notices so that you don’t receive subsequent fees. Many people receive multiple overdraft fees at the same time, as they make a few small purchases without realizing they’ve already overdrawn their accounts. With online checking accounts, you’ll receive notification of overdraft fees more quickly. This allows you to adjust your spending and avoid additional charges before it’s too late.
Jess Hall writes out of Jersey City about different personal finance topics, including how online checking accounts can help you avoid overdraft fees. She likes to read finance blogs and articles to share with her friends, such as this one http://www.losangelesmammablog.com/2011/08/personal-checking.html.
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