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When our bank account is overdrawn, it means that we are in financial trouble. This is a related question because in the US, banks have very strict policies and more importantly, a lot of money is lost due to this behavior.
To fix this, we got some timely advice from the experts. Ways to protect yourself from overdrafts.
An overdraft typically occurs when you want to make a payment or your account is automatically debited and you don’t have enough funds to cover the charges. This can be problematic if you opted for the low balance protection offered by your bank when you signed up for their product.
What sounds good in theory can actually hurt you.
If you don’t want to pay those pesky overdraft fees your bank charges to your checking account, you need to change your money and spending habits. You just need to practice some common sense and have some discipline to avoid this silent embezzlement. As personal finance experts, we recommend that you: Watch your finances Failure to track your income and expenses is the leading cause of overdraft fees.
Today, there’s no reason not to keep track of your statements, since you have a variety of resources to do so. You have apps, online or mobile banking, alert services, personal notifications and more. In addition to automatic payments, you also need to know your flat rate, amount, and payment date. Accurate information about your expenses and income is essential to avoid running out of money. This simple step can help you gain more control and understanding of how your finances are managed.
Link other products to your main account
Whether you use a checking or savings account for most of your spending, you probably have a backup solution to prevent overdrafts. It can be a line of credit, a credit card or a secondary account. These options may have a fee, but certainly much less than an overdraft fee. It’s a simple process and if you don’t have enough money, these tools can be used as supplementary funds to cover the missing balance.
The only drawback is that the line of credit and plastic accrue interest when you pay them back. However, this measure is cheaper than paying for not having enough money in your account. Overdraft Insurance Waiver Since 2010, banks and other institutions must seek your consent to apply insufficient balance protection.
Known as the «membership rule,» this rule gives the institution where you have money the right to charge you a fee each time you pass through. This is a cash advance that costs around $35 or more per advance. If for some reason you have accepted this coverage, one way to thwart it is to find out if your bank allows you to waive it.
When this happens, instead of processing the transaction with the borrowed money, it can’t be processed at all. While this may seem like a temporary inconvenience, the good news is that you won’t lose any money. Using balance notifications to view our online statements is often misleading because some transactions have not yet been processed.
Obviously, if you have a lot of fixed and unforeseen expenses, you need to be more organized. One way to avoid overdrafts is to ask your bank if they offer a minimum notice. In this way, you will receive a message or email advising you that you do not have sufficient funds and that you should take the appropriate steps before making another payment.
Changing banks Trusting a large financial institution represents a lasting relationship. However, sometimes the change can be the best solution to a problem that is seriously affecting your personal finances. You will have many options, but it is a decision that must be supported by a number of factors. If your current bank isn’t flexible on acceptance rules, or if you think their service isn’t meeting your expectations, other lenders can help.
Overdrafts are more common than you might think because many people aren’t used to carefully managing their finances. It’s not about being told all the time, it’s about establishing effective controls that you’ll keep applying without thinking. In this way you can avoid bad periods and unnecessary costs. Ultimately, it’s best to combat overdrafts with savings or a reasonable cushion so this doesn’t happen again. We know that spending is an essential practice, but with the help of Busconomic Comparator and our experts we can put you on the path to healthy finances. English: How to protect yourself from overdraft