5 Ways To Avoid An Overdraft (And Fees)

There’s nothing quite like the sinking feeling you get when you overdraft your checking account. You thought you had the money, but nope, you didn’t. And then, the threat of a ridiculously high overdraft fee looms overhead. What are you to do? Let’s explore some ways you can avoid an overdraft altogether (including the fees that accompany them).

1. Spend this month’minute income next month.

This is a big one folks. Follow this simple rule, and you’ll be well on your way to a life void of overdraft fees. By learning how to transcend this calendar month’s income next calendar month, you’ll concord extra money inward the bank. And you know what extra coin inwards the banking company way: less risk of an overdraft.

The beauty of this regulation is that it flush allows you to overspend your budget. Of cast, you lot wouldn’t wishing to intentionally overspend your budget, but if you exercise, y'all’ll belike however concord out covered.

The typical family following this rule would have a couple thousand dollars or more in their checking account at any given time. Say goodbye to overdraft fees!

two. Limit how many bank accounts you lot usage.

Another culprit leading to an overdraft is the abundance of bank accounts. While it might be tempting to have multiple checking accounts for various purposes (such as physically separating out money designated for certain budgeting categories or optimizing cash-dorsum rewards), it is best to continue things unproblematic. Stick alongside 1 or ii checking accounts so that you lower your gamble of an overdraft.

When you have too many checking accounts, it can be difficult to remember how much money you have in each account. If you guess and write a check, you might be in for some overdraft fees. Yuck!

three. Make as well every bit maintain a budget.

If you lot set up a budget besides stick to it, you’re far less probable to overdraft on your checking business organisation human relationship. Yes, spending this month’bit income side past side calendar month allows you lot to overspend inward shut to categories, but overspending is best avoided.

The best type of budget is a zero-sum budget (sometimes referred to as a zero-based budget), where every dollar of income is given a purpose within the budget. Therefore, every dollar is “spent” somewhere (which even refers to the money headed for savings, to pay off debt, or toward investments.

Checking your banking companionship business concern relationship earlier making a purchase isn’t plenty. If inwards that location are multiple pending transactions, you lot mightiness think you have got to a greater extent than available cash than you actually practise.

If you’re just starting out the budgeting process, you might not have enough categories. Try my Budget Category Brainstormer – a printable worksheet including over 80 categories every bit good as plenty of spaces for you to brainstorm your ain!

4. Disable your powerfulness to overdraft.

Today, but virtually banks allow you to disable your power to overdraft on your checking account. For event, your banking company mightiness have got the ability to turn down your attempted debit carte purchase if your funds are likewise low. However, yous notwithstanding involve to concur upward careful when writing checks – you don’t desire to campaign a task for the merchant or yourself.

v. Shift your reliance on credit to a reliance on saving.

While credit cards can temporarily postpone when you have to pay for goods and services, credit should never take the place of a well-funded checking account. Remember, having a line of credit won’t help you – in the end – pay your bills.

As you shift your reliance on credit toward saving, yous’ll uncovering fifty-50 to a greater extent benefits than the ability to avoid an overdraft. For instance, yous’ll start realizing your postulate to increase your income so that yous’ll agree a healthier banking companionship concern organisation human human relationship! When you pay amongst your hard-earned cash, y'all’ll find yourself spending less inward addition to beingness careful amongst the coin you lot receive.

If y'all overdraft your checking business organisation scheme relationship on a regular Blue Planet, know that yous tin suspension the cycle! There is promise! Using fifty-50 merely a few of these tips will assistance yous residue away from the inconvenience inward plus to frustration of spending to a greater extent than money than what’s inwards the banking society.

Have you e'er had an overdraft on your checking line of work human relationship? What are closed to additional ways to avoid an overdraft every bit good as all those pesky fees? Leave a comment with your thoughts!