Overdraft protection can be a great safety net but it’s also SUPER costly. The average overdraft fee is $35. That’s an insane charge if you use overdraft protection on anything less than that! So let’s avoid that situation with these tips and tricks.
1. Turn off overdraft protection
Probably the easiest solution to avoid overdraft fees is to just rid yourself of the chance to get an overdraft fee. Banks and credit unions will traditionally offer you the option to enroll in overdraft programs when you open your checking account. Federal legislation that passed in 2010 requires banks to get your consent to enroll you in overdraft protection. Check the fine print of your account, your mobile bank app or call your bank and ask if you are enrolled. If you are enrolled, simply ask to opt-out of the program.
2. Keep track of your balances daily
Almost every bank and credit union now has a mobile app. So it’s super easy
for you to stay on top of your balances. By checking your balances at least once a day you can make sure that you have enough money available for all your purchases and automatic payments that may hit that day.
3. Keep a “cushion” amount in your account
Keeping a cushion amount in your account is a safe way to make sure you always have a certain balance. For example, making sure you have at least $100 in your checking account at all times will let you be certain that when you’re standing at the register and ring up a total of $98.74 you will most definitely have that available.
4. Get alerts when your balance goes below a certain amount
Almost every bank and credit union will allow you to sign up to get notified
when your account balance drops below a certain level. Guess, what, Konviv will also ping you when you dip below a certain amount! Alerts will keep you up to date on your balances because it can be hard to keep track of all the automatic transfers and payments that can be going in and out of your accounts. The easiest thing, however, is to sign up for Konviv! We’re here to make money management as easy as pie.
5. Use Automatic Payments and Transfers
Setting up automatic payments from your account for utilities, loans and other bills is a great way to go. With automatic payments, you can specify the exact date that the money leaves your account so you can make sure you have a sufficient amount left in your account.
6. Avoid using debit cards for small purchases
When you are making a small purchase, pay with cash, or just use Konviv! Using debit cards for small purchases can make budgeting a real headache (but not when you have Konviv). Without a tool like Konviv, it’s super easy to lose track of your balance and overspend when you are making lots of small purchases in a short amount of time.
7. Avoid using debit cards to check into a hotel or rent a car
Some types of businesses place holds on your checking account when you pay by debit card, either the full amount of the bill or sometimes more. While no money actually leaves your checking account, a block affects your available balance. It’s better to use a credit card in these scenarios because of the time you are afforded in paying it off and the rewards that can be offered by certain cards.
8. Link your account to a “backup” account
Some banks offer an overdraft protection transfer service. By setting this up your checking account will be linked to another account, such as your savings or credit account, at the same bank. This way, when there’s not enough cash in your checking account to cover a transaction, money will be transferred from your linked account to cover the difference. This is not usually a free service and there is typically a fee, but it is WAY cheaper than overdraft fees.
9. Pay off the overdraft fee as soon as possible
When you get that pesky notification that you just triggered an overdraft, you might still be able to prevent the fee. Check if your bank has a daily cutoff time, or deadline, for adding money to an account the same day to avoid a fee. Even if you miss the cutoff, transferring money into your account sooner rather than later can prevent other fees like a daily charge from racking up against you.
10. Sign up for Konviv (and set a budget)!
Setting a budget, and keeping track of your budget, is an reliable way to make sure you never spend more than you are supposed to. If you know how much you should be spending you won’t spend too much.You can either make a budget yourself the old fashioned way or just use Konviv and we can do it for you! With Konviv, managing your money is simple, intuitive, and secure. Managing your money has never been easier than using Konviv!
