How to Avoid Overdraft Charges

13 Jul How to Avoid Overdraft Charges

Avoiding overdraft charges may seem like a no-brainer, but when you are making lots of purchases in a small amount of time, money can add up quickly. Overdraft charges frequently occur around Christmas time, when people are shopping for gifts and possibly a little for themselves during holiday sales. Adding up purchases in your head may work for some, but chances are you will forget a purchase or two. Something as small as a stop at Chick-fil-A to grab a sweet tea on your way to the next store could end up costing you a lot more than $1.50.

Here are a few tips to avoid the extra charges:

1. Balance your checkbook or check your online statement periodically. Old school balancing with a pen and paper tends to be the most accurate because you are adding in checks you may have used to pay bills. Checking your online statement may not yet reflect any checks, so be aware. However, we recommend monitoring your online account, as it is a great way to detect fraud as soon as it occurs.
2. Keep a savings account cushion. Ideally, you will want this savings account at the same bank, so you can easily transfer money to your checking account if you suspect you may have overdrafted your funds.
3. Sign up for direct deposit and use automatic payments to pay bills each month. This is a simple way to set up a budget and stick to it. You will always know what you have coming in and going out and can set the bills to come out after your direct deposit posts to your account.
4. Avoid using your debit card for purchases that may place a hold on your account. Gas purchases, hotel stays, and car rentals will place holds to make sure that you can cover the cost of the expense. We also recommend to avoid using your debit card for services where a tip may be applied. The tip won’t be reflected in your account for a few business days.
5. Finally, sign up for online alerts through your account. These alerts are sent when your account funds are getting low and will prevent you from overdrafting. If you sign up for online banking, remember to keep your password in a secure location and we recommend changing your password frequently. Never log into your online banking account on a public computer.