When we incur too many overdrafts in our bank accounts it means that something is not working well with our finances.
It is a relevant issue because in the United States banks are very strict with their policies and especially because you are losing a lot of money with this behavior. To remedy this, we have some specific suggestions from our experts.
- Ways to Protect Against Overdrafts
- Closely monitor your finances
- Link other products to your main account
- Waive Overdraft Coverage
- Use balance notifications
- Change bank
- Final recommendation
Ways to Protect Against Overdrafts
Overdraft usually occurs when you go to pay for something or are automatically charged to the account and you do not have enough funds to cover the expense.
It can be problematic if you have opted for the insufficient balance protection that the bank offers you when purchasing their products. What sounds good in theory could actually be doing you a disservice.
If you don’t want to pay the annoying commissions for overdraft applied by banks in their checking accounts, you must change your financial and consumption habits. You just have to practice some common sense and have some discipline to avoid this silent embezzlement. As specialists in personal finance, we recommend:
Closely monitor your finances
The lack of monitoring of the income and expenses that you manage is the main cause of the occurrence of overdraft fees.
Today there is no excuse for not being aware of your account statements because you have a wide variety of resources to do so. You have at hand apps, online or mobile banking, alert services, personal notifications and more.
In addition to automatic payments, you need to keep in mind what your fixed expenses are, the amounts and the collection dates. All accurate information about what you spend and receive is essential to avoid the occurrence of insufficient funds.
This simple measure helps you take better control and be more aware of how you manage your finances.
Link other products to your main account
Whether you use your checking or savings account To do most of your consumption, you have the option of a backup or backup to avoid overdraft. It can be a line of credit, a credit card, or an auxiliary account.
These options could represent an expense, but it is certainly much less than the overdraft fee (commission for overdraft). It is a simple process by which these instruments serve as auxiliary funds to cover the balance that is missing if the money does not reach you.
The only detail is that both the credit line and the plastic are subject to interest and you must return the money. However, this measure is more sensible than paying for not having enough money in the account.
Waive Overdraft Coverage
Since 2010, banks and other entities must request your consent to apply the insufficient balance protection. Known as the “opt-in rule”(Acceptance rule), this gives the institution where you have your money power to charge you a commission every time you overdraw.
It is a cash advance whose cost is around $ 35 or more each time it happens to you. If for some reason you accepted this coverage, one way to counteract it is to find out if your bank allows you to waive it.
When this happens, instead of processing the borrowed money transaction, it simply cannot be processed. Although it seems like a momentary inconvenience, the good thing is that you are not losing money.
Use balance notifications
Often, reviewing our online statement can be misleading because there are operations that have not yet been processed. It is clear that, if you have many fixed and unforeseen expenses, you need a more organized management.
One way to avoid overdraft is to ask your bank if they offer notifications associated with a minimum limit. In this way, you receive a message or an email warning you that you have low funds and you must take the respective measures before another payment.
Having the backing of a major financial institution represents a relationship of years. However, there are times when change may be the best solution to a problem that is seriously affecting your personal finances.
Options are not going to be lacking, but it is a decision that must be supported by a series of factors. If the bank is not flexible with the opt-in rule or you think their services don’t meet your expectations, a different approach could benefit you.
The overdraft It is more common than we think because many people are not in the habit of meticulously managing their finances. It is not about being pending all the time, but about establishing certain effective controls that you will continue to apply without thinking. This way you avoid bad times and unnecessary charges.
Ultimately, overdraft is best combated saving or having a reasonable mattress so that this situation is not recurrent. We know that spending is an unavoidable practice, but with the help of Hispanic Business Blog’s search engine / comparator and our experts, we can guide you towards healthy finances.