Yahoo Finance I’m a Bank Teller: 7 Ways To Make Sure You Never Overdraw Your Checking Account
It’s happened to all of us at one point or another: we go to make a withdrawal at an ATM or put a large purchase on our debit card and suddenly we are hit with a notice from our bank that we’ve overdrawn funds from our checking account. It’s not only frustrating, but usually comes associated with a fee tagged on to it, which is not good for your personal finances.
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Bank tellers see this happen all the time, so they have some insights as to how to avoid this debacle in the first place and even a few tips on what you should do if you find yourself in a below zero balance situation.
Here are seven ways to make sure you never overdraw your checking account.
Also see 10 of the best rewards checking accounts.
Track Your Balance
Not just weekly or monthly, but in real time, said Kevin Huffman, banking and personal financial expert and owner of Kriminil Trading.
“Most banks allow you to view your account balance via a mobile app or online portal. Use it.” Huffman said. “Checking your balance on a regular basis throughout the day offers a snapshot of your balance and reminds you what you have available to spend.”
“Whether you use digital methods to track your transactions or opt for pen-and-paper, monitoring your transactions helps you keep spending in check and catch fraud early,” said Julie Beckham, financial education officer at Rockland Trust.
If you would rather not check your account regularly, set an alert on your account that will text or email you if you are under a certain balance. Technology can help you, so let it.
Huffman cited one study which found “…that consumers who track their accounts online are 40% less likely to pay an overdraft fee.”
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Use Budgeting Tools
In the modern age of banking, there are apps, online resources and in-person tools you can utilize to stop overdrawing from your checking account. That’s because in Beckham’s professional opinion: “It’s easy to spend mindlessly.”
“Setting a budget or intentional spending plan gives you a holistic view of your finances,” said Beckham. “Track your sources of income, necessary expenses and discretionary spending. You may realize there are spending habits you’d like to change. Embrace the power you have to change your habits by keeping your near and long-term financial goals in mind as you plan your spending and saving.”
Check in with your bank to see if there are tools to monitor your account balances, as well as track your spending. That’s budgeting in a nutshell, not to mention protection from overdrawing your funds.
If you have several credit cards, savings or checking accounts linked together, this is incredibly beneficial to see where your money is going. Create a budget, keep an eye on your expenses and you can adjust when necessary to stay ahead of your financial situation, including no more overdrafts and fees associated with them.
Set Low Balance Alerts
Getting alerts from your bank can be alarming, but they are not always bad. Some are even put in place to make sure that you side step an error before it happens. Such is the case with “low balance” alerts.
“Most banks give you the option to set up customizable account alerts,” Huffman said. “Set low balance alerts that go off whenever your account balance falls below a certain amount.”
“This serves as a reminder to cut back on your spending or to move money around so that you avoid an overdraft,” he said.
Stay In Touch With Your Bank
In the age of digital banking, you might be timid to reach out and stay connected with your bank through a line of direct communication. Most bank tellers work in person and advise customers who frequently overdraw their checking accounts to not be scared of contacting their banks.
That’s because tellers or bank managers can work with customers to repay and replenish the overdrawn accounts. In some cases, they might also be able to waive any fees that have piled up due to an overdraft.
Or do try the method that Beckham dubbed as “loud budgeting.”
“Talking about money openly and honestly with those we care about is a healthy practice,” Beckham said, explaining that starting out “it may feel uncomfortable or difficult because of the stigma around financial conversations.”
“Speaking up when plans with friends or family are out of your budget can feel empowering. You may even suggest budget-friendly alternatives that save everyone some cash,” Beckham said.
So don’t ignore your negative balance. Instead, communicate openly, honestly address the issue and avoid racking up even more fees.
Link Your Accounts For Overdraft Protection
Chances are that if you have a checking account with your bank, you probably have additional accounts — checking, savings or otherwise — that are parts of the same bank. Linking them can provide additional funds in the event that you overdraw on your checking account.
“If you have checking and savings accounts at the same bank, consider linking them for overdraft protection,” Huffman said. “This allows your bank to automatically move money from your savings to your checking if you go overdrawn and have a bad check or declined transaction.”
Opt-Out of Overdraft Coverage
While overdraft protection can be useful, it usually comes with a price, Huffman said.
“Avoiding overdraft coverage in your bank account, provided you are disciplined enough to use your debit or credit card only if you have enough money, is useful,” he said.
“It often leads to a bad habit, where you rely on overdraft funds,” Huffman explained. “Without it, you are more likely to be a more efficient budgeter overall.”
Keep a Buffer Amount in Your Checking Account
Keep a small amount of money — perhaps $25 to $50 — in your checking account as a buffer, to absorb unexpected debits or small miscalculations from causing an overdraft.
“Life happens to us all — the car breaking down or a medical emergency, for example — that can strain our regular budgets,” Beckham said, suggesting that it is “wise to create an emergency fund to help when needed.”
“Putting aside even a small amount with each paycheck can add up quickly,” he said. “One tip to make saving even easier is to have a percentage or amount of your checks directly deposited into a separate savings account. Set it and forget it and that money you don’t see as accessible just might save you a lot of stress in the long run.”
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This article originally appeared on GOBankingRates.com: I’m a Bank Teller: 7 Ways To Make Sure You Never Overdraw Your Checking Account
