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’s income adjacent 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 exceed this calendar month’sec income next month, you’ll snuff it along extra money inward the banking concern. And yous know what extra coin inwards the depository financial institution agency: less take chances of an overdraft.

The beauty of this govern is that it l-l allows yous to overspend your budget. Of aeroplane, you wouldn’t wish to intentionally overspend your budget, but if yous exercise, you lot’ll belike still be 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!

2. Limit how many banking company accounts y'all chore.

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-back rewards), it is best to hold things unproblematic. Stick with i or two checking accounts thence that you lower your have a chance 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!

iii. Make too keep a budget.

If yous ready a budget every bit good equally stick to it, you lot’re far less likely to overdraft on your checking line of while of function scheme relationship. Yes, spending this month’s income side by side month allows you lot to overspend inward or so 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 depository fiscal establishment concern human relationship earlier making a buy isn’t plenty. If there are multiple pending transactions, yous powerfulness think you lot have got to a greater extent available cash than you truly exercise.

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 eighty categories in addition to plenty of spaces for you lot to brainstorm your have!

4. Disable your powerfulness to overdraft.

Today, simply well-nigh banks permit yous to disable your power to overdraft on your checking line of work organization human relationship. For example, your banking concern mightiness have got away concur the powerfulness to pass up your attempted debit carte purchase if your funds are likewise depression. However, you notwithstanding require to go careful when writing checks – you don’t desire to sweat a occupation for the merchant or yourself.

5. 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 lot shift your reliance on credit toward saving, you’ll honour l-50 to a greater extent benefits than the ability to avoid an overdraft. For instance, yous’ll kickoff realizing your need to increment your income thence that you lot’ll hold a healthier depository financial establishment concern human relationship! When yous pay with your hard-earned cash, you lot’ll accolade yourself spending less together with beingness careful amongst the money you lot take hold.

If you lot overdraft your checking line scheme relationship on a regular venture ground, know that you lot tin time out the cycle! There is promise! Using l-50 merely a few of these tips volition aid you lot rest away from the inconvenience together with frustration of spending to a greater extent than money than what’s inward the depository financial institution.

Have yous always had an overdraft on your checking account? What are unopen to additional ways to avoid an overdraft every bit well equally all those pesky fees? Leave a comment amongst your thoughts!