Managing your checking account and avoiding costly overdraft fees might seem like a daunting task, especially if you’ve ever found yourself in the red. But don’t worry—keeping your finances on track and making sure your account stays ahead doesn’t have to be difficult. With the right habits and a bit of foresight, you can easily steer clear of overdraft fees and maintain control of your money.
Understand your account balance
One of the simplest ways to avoid overdraft fees is by keeping a close eye on your account balance. Knowing exactly how much you have available can help you avoid those difficult moments when you make a purchase only to find out there’s not enough money in your account.
Check your balance regularly to stay on top of spending. With the rise of mobile banking, it’s easier than ever to access your account and monitor your transactions in real time. Most banking apps send notifications for deposits, withdrawals and low balances. That way, you can receive an alert if your account is nearing its limit.
Use mobile banking to your advantage
Mobile banking is a game changer when it comes to keeping track of your checking account, but it doesn’t just stop at balance checking. Many apps also include budgeting tools and spending trackers that help you keep tabs on your monthly expenses. Set up automatic alerts for low balances or unusual activity to catch any discrepancies before they become issues. By staying proactive with mobile banking, you’ll always know where your finances stand.
Link your checking account to a backup source
Sometimes, life happens—and you may find yourself in a situation where your checking account balance is lower than you anticipated. Instead of panicking or worrying about overdraft fees, consider linking your checking account to a backup account, like a savings account, a credit card or a line of credit.
With overdraft protection in place, if you do accidentally spend more than you have in your checking account, your backup source will cover the difference. While many banks offer overdraft protection, it’s important to read the terms and conditions. In some cases, overdraft protection may come with a small fee, but it’s typically less expensive than an overdraft fee.
Keep track of your spending
It’s easy to lose track of your spending, especially with the convenience of debit cards and online shopping. However, unplanned purchases can quickly add up, putting you at risk of overdrawing your account. That’s why it’s essential to keep track of every transaction.
One helpful strategy is to maintain a budget. Write down your income and expenses for the month. Try to stick to it. Many banking apps include built-in budgeting features, helping you categorize spending and even set spending limits. If you prefer a more traditional approach, using a simple spreadsheet or a budgeting app can help you stay on top of your financial goals.
Set up automatic bill payments
Late fees can sneak up on you if you’re not careful. If you often find yourself scrambling to pay bills on time, setting up automatic bill payments can be helpful.
By scheduling your bill payments to be withdrawn directly from your checking account, you won’t have to worry about missing a due date. Many banks offer this service for free, and it can help ensure your bills are always paid on time. Just be sure to monitor your balance, especially around payment due dates, to make sure you have enough funds available.
Choose a checking account with no overdraft fees
Some banks offer checking accounts that won’t allow you to overdraw your account, meaning you’ll never be hit with an overdraft fee. While this feature can offer peace of mind, it’s important to note that the bank may simply decline the transaction if there aren’t enough funds in your account.
While this could be an inconvenience if you’re trying to make an urgent purchase, it may be a smart option if you’re prone to overspending or tend to forget about your account balance. By choosing an account that prevents overdrafts, you’ll never be caught by surprise with an expensive fee.
Keep a cushion in your account
It’s always a good idea to keep a cushion of extra funds in your checking account, even if it’s just a small amount. Having a little buffer—say, $50 to $100—can help ensure that you don’t accidentally overdraft, especially if you forget about a pending transaction or an automatic bill payment.
By maintaining a small cushion, you give yourself the breathing room to cover any unexpected charges without having to worry about your account going negative.
Be mindful of your spending habits
Ultimately, avoiding overdraft fees comes down to responsible financial habits. If you find yourself constantly struggling with your checking account balance, it might be time to evaluate your spending. Are there recurring expenses or habits that you could cut back on?
Taking the time to review your monthly expenses and identify areas where you can save could help prevent you from overspending and, in turn, help you avoid overdraft fees. By staying mindful of your spending and staying organized with your finances, you’ll be well on your way to keeping your checking account ahead.
Disclaimer: Article content is intended for information only. It may not reflect the publisher nor employees’ views. Consult a financial professional before making financial decisions. Publishers or platforms may be compensated for access to third party websites.
