Eliminate Fees From Overdrafts And Bounced Checks
With this post, the aim is to put mechanisms in place to eliminate as much as possible the fees that stem from routine overdrafts and bounced checks. Although they are costly problems, they're symptomatic of a more serious issue: poor financial management skills. This can really jeopardize your future.
What's an overdraft? Anytime you make a transaction for more than the amount available in your checking account, you overdraw it. That transaction can be the writing of a check, an ATM withdrawal, a debit card purchase, an online bill payment, and so on. What matters is that you used more than your available balance, and the negative balance that ensues is called an overdraft.
At this point, your bank has two options. It either pays the amount of the transaction or it doesn't. If it chooses to pay in spite of you not having the money available, you will be charged an overdraft fee. If it chooses not to pay and returns the check, you will be charged a bounced check fee.
You can certainly eliminate such fees if you do what you need to do to manage your bank account properly. That means doing your best so that your account does end up with a negative balance by keeping track of how much money you have available at all times. It's suggested that you register your transactions as they happen. You should also keep tabs on any bank fees so that you record them too.
Be on the lookout when it comes to transactions where you don't have to write a check or pay with cash: ATM withdrawals and fees, debit card purchases, and online payments just to name a few. Online bill payments on a monthly basis for utilities, insurance, or loan payments should also be thrown into the mix. Always be on top of your account balance and in case it shows a higher amount than what it's supposed to, be careful and look for transactions that haven't cleared yet.
Make balancing your accounts part of your monthly routine. If you need to check, at any given moment, which of your transactions have cleared and which ones haven't, make a phone call to your bank, view your account online, or visit an in-network ATM to avoid fees for checking your balance.
If, unfortunately, you find yourself having overdrawn your account, you best bet would be to deposit some money back into it as soon as you have cash available. Remember that you will also have to account for your bank's overdraft fees. Some banks will take the opportunity to sell you on alternative ways to to cover overdrafts.
Odds are, you will be given two choices: linking your checking account to a savings account, or getting an overdraft line of credit. The first option involves linking your checking account to a savings account so that funds are automatically transferred from the latter to the former to prevent any overdraft situation. The second option involves filling out a credit application (which will be treated as a loan) for an overdraft line of credit. What this does is that you're allowed to withdraw funds that you don't have, up to your credit limit. The used portion of your credit line generates interest, and the line itself may be subject to an annual maintenance fee.
What's an overdraft? Anytime you make a transaction for more than the amount available in your checking account, you overdraw it. That transaction can be the writing of a check, an ATM withdrawal, a debit card purchase, an online bill payment, and so on. What matters is that you used more than your available balance, and the negative balance that ensues is called an overdraft.
At this point, your bank has two options. It either pays the amount of the transaction or it doesn't. If it chooses to pay in spite of you not having the money available, you will be charged an overdraft fee. If it chooses not to pay and returns the check, you will be charged a bounced check fee.
You can certainly eliminate such fees if you do what you need to do to manage your bank account properly. That means doing your best so that your account does end up with a negative balance by keeping track of how much money you have available at all times. It's suggested that you register your transactions as they happen. You should also keep tabs on any bank fees so that you record them too.
Be on the lookout when it comes to transactions where you don't have to write a check or pay with cash: ATM withdrawals and fees, debit card purchases, and online payments just to name a few. Online bill payments on a monthly basis for utilities, insurance, or loan payments should also be thrown into the mix. Always be on top of your account balance and in case it shows a higher amount than what it's supposed to, be careful and look for transactions that haven't cleared yet.
Make balancing your accounts part of your monthly routine. If you need to check, at any given moment, which of your transactions have cleared and which ones haven't, make a phone call to your bank, view your account online, or visit an in-network ATM to avoid fees for checking your balance.
If, unfortunately, you find yourself having overdrawn your account, you best bet would be to deposit some money back into it as soon as you have cash available. Remember that you will also have to account for your bank's overdraft fees. Some banks will take the opportunity to sell you on alternative ways to to cover overdrafts.
Odds are, you will be given two choices: linking your checking account to a savings account, or getting an overdraft line of credit. The first option involves linking your checking account to a savings account so that funds are automatically transferred from the latter to the former to prevent any overdraft situation. The second option involves filling out a credit application (which will be treated as a loan) for an overdraft line of credit. What this does is that you're allowed to withdraw funds that you don't have, up to your credit limit. The used portion of your credit line generates interest, and the line itself may be subject to an annual maintenance fee.
About the Author:
Are you in ChexSystems because of overdraft fees? Read my report on banks that do not use chexsystems on Money Galaxy, a personal finance blog I contribute to.
posted by Debt Consolidation Loan at
1:33 PM
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