How to Prevent Overdraft Fees

No one likes overdraft fees. If we all had our way, they wouldn't even exist. But the reality is they do exist, and banks will gladly charge them when their customers overextend their checking account balances. The best strategy for dealing with overdraft fees is to avoid them all together. You can follow a few simple steps to prevent overdraft fees and keep more of your hard-earned money for yourself.

Instructions

Difficulty: Easy

1. Link your checking account to a savings account with the same bank. When you know your checking account's balance isn't enough to cover pending transactions most banks will allow you to transfer funds immediately and prevent overdraft fees. Some banks will even pull from your saving account's balance before using your overdraft protection.
2. Record check and debit card transactions daily. This is probably what gets most people in trouble. Use a good old-fashioned check register or a more contemporary computer program such as Quicken.
3. Use online banking if your financial institution offers it. This feature allows you to see pending and cleared transactions in real time, just as your bank does. If you see that some pending transactions may set you back, then you can quickly make a cash deposit or transfer funds in order to cover yourself.
4. Understand your bank's overdraft policies. Some banks' policies are a little more merciful than others are. In many cases, you can prevent overdraft fees by timing deposits before your bank's cut-off time so they are posted the same day as a transaction that could potentially overdraw your account.