10 Tips on Avoiding Overdraft and Bounced Check Fees Part 2
written by Credit-HQ Expert- Opt out of overdraft protection. Usually when you open an account, they automatically enroll you in this program. Once you accept that part of your account by signing up for it, if your account ever goes negative, you will get hit with one or more overdraft fees, each of which could drag your account further down by as much as $20 to $35 per overdraft charge.
Banks have little ways of making this happen. For example, if five checks come in and you can cover all but the highest check, they take that one out first, which forces all five checks into overdraft. If they charge you $25 for each check, that is $125 they collect because they set it up to work like that. But you can tell them up front you want nothing to do with their overdraft plans and they must accept your decision.
- Link your checking account to a safety net. Another thing banks don’t tell you is that there is a way to set up a safety net account to handle overdraft for you. To do this, just set up a savings account to put that extra $100-$500 in and have the bank link that account to your checking account. You can also take out a small line of credit with the bank that will perform the same function. If your checking account is low and checks come in, they draw the money out of that safety net account and charge a much smaller feel for the service. Often the fee is as low as $5 for all transactions in a day done to protect your checking account. This is a system that is much easier to live with.
- Be careful how you use your debit card. If you use your debit card with hotels, rent-a-car agencies and gas stations, they often put a hold on your checking account for the full amount of the bill you paid plus 20% more or so to assure they will get paid. They don’t take the money out of your account but if that hold is in place for even part of a day, that could cause your checking account to go into overdraft until that hold is lifted.
- Only use your debit card for bigger purchases. Larger debit card charges require a signature. Signature purchases delay the impact of that debit on your account for a few days making those transactions work more like a check. If you use your debit card for small purchases, those transactions hit your bank account immediately and it is a lot harder to keep your checking account register current with your real balance.
- Correct overdrafts immediately. As soon as you are aware that your account has run out of money, take action. Move some money around to get your account back in the black so checks that are still coming in can be covered. If you experience problems with your account and you have not had problems before, often the bank will waive the overdraft fee because you are a good customer.
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