The idea of avoiding overdraft fees or insufficient funds is a simple thing on paper.? You only spend the money that you have in your bank account or checking account.? But with the ACH and automatic debits, online banking, and the variety of users in a single family, it can be easy for an account to go into the red.
Unfortunately, this is not a good thing. Most banks pile on the fees and penalties to the end user.? In most cases, you will have to pay a fee for each incidence of overdraft, which can quickly run into the hundreds of dollars.? Say you have five checks hit, at the same time.? One check, the smallest, puts you over the limit.? The other checks not only are likely to be rejected (resulting in check bouncing fees with your vendors or stores that took the checks) but they are also likely to cost you at least thirty dollars for each incidence. This sounds harsh, but it’s likely in the fine print you didn’t read when you opened your account (and it’s completely within the law).
So, the checks are returned unpaid, your account is suddenly at least one hundred twenty dollars in the negative, and you feel like you need the number of the truck that just hit you and ran you down.
Maybe you have experienced non sufficient funds before?? If so, you know how easy it is to suddenly feel bewildered and confused.? What is necessary is that you try as hard as you can to avoid this kind of predicament.? Not only does it damage your credibility with your bank or lending institution, but it also can make your local stores refuse your checks, forcing you to pay for items another way.
Repeated offenses can land your name on a national list, and the fees can grow higher depending on the policies of your institution.? Eventually repeat insufficient funds can lead to your account being closed, and make it more difficult for you to open a checking account anywhere else.? So what can you do?? Well here are a few things you can do to help prevent insufficient funds.
- Overdraft Protection. Some banks offer this for free, for the first couple of incidents.? If it is not something you struggle with all the time, then this type of once in a great while protection may be plenty.
- Overdraft Account. Banks or lending institutions will often allow you to use your savings, or to create another account with a small balance, to help insure against being overdrawn.? The two accounts are linked, and if you accidentally dip beneath the available funds in your checking a small amount is automatically transferred to cover your check.
- Register Zealot.? Learn to be very disciplined, and write all your transactions down.? If other family members have access to the main family account, consider opening up a smaller individual account for them.? Not only does that make them more accountable and teach money discipline, but also it allows only you or perhaps you and your spouse to have access to the main account.? This results in less confusion and more readily tracked finances.
It’s important to remember that running into an overdraft situation can not only cost you money, but cause you to go further into debt, or even hurt your credit history. It’s best to avoid this situation if at all possible.