Are you tired of paying fees for overdrafts? Overdraft fees can quickly stack up, especially if your balance is negative for multiple days. Still, you should never have to overdraft as long as you are careful. Follow these tips to protect your personal banking account from overdraft problems.
1. Put Your Automatic Bills On Your Credit Card
Many people automatically draft bills from their checking account, but this can lead to overdrafts — especially when the bill is much higher than they expect. If your mobile phone bill and your electricity are both much higher than usual, will your transactions begin to bounce? A credit card is ideal, because it gives you time to review the transaction before you actually pay it.
2. Avoid Using Your Debit Card For Purchases
Debit cards should be avoided for purchases for two reasons: they can overdraft your account by taking a few days for the debits to transfer, and debit transactions are harder to get overturned if you have issues later on. If you need to reverse a credit card transaction, it’s usually far easier. Debit cards also shouldn’t be used online for security reasons — if your debit card number is stolen, your account can be emptied and you’ll have to fight to get the money back.
3. Request Bank Checks Rather Than Writing Checks
Do you have a problem with forgetting checks that you’ve written? Many people do, especially as checks become more infrequent. Rather than writing out a check, you might want to consider getting a check directly from your bank. You can request a bank check at the teller window; it will be debited from your account immediately so that there is nothing to track, and it will still be written to a specific person so it is secure.
4. Get A “Sweep” Account
If you have both a savings and checking account, consider looking into sweep accounts. A sweep account is a checking account that will “sweep” funds from another, related account, into itself rather than overdrafting. If you find yourself juggling savings and checking transfers, this is likely the solution.
You can also turn off overdraft protection on your account entirely, but this is inadvisable. When you turn off overdraft protection, none of your transfers will go through if you don’t have the funds. This can lead to very difficult situations, such as having a $900 rent check bounced because you only had $895 in your account. Most of the time, bouncing a check is not preferable to paying off a small fee.