How to Avoid Overdraft Fees
More and more Americans are getting caught in a costly situation that can be avoided: Overdraft fees.
USA Today quotes information from the Consumer Financial Protection Bureau showing that Americans paid $15
billion in overdraft fees to their financial institutions in 2016. It’s getting worse, with Forbes Magazine reporting that amount increased to a staggering $34 billion just a year later – the highest total in almost a decade!
You have a better chance to steer clear of overdraft fees by staying on top of your account balance with these tips from the personal finance and education site LearnVest.
Use account balance alerts
Financial planners have encouraged people to set up an automatic reminder from your financial institution to let you know if your balance falls below a set dollar amount. These alerts help you determine if you need to transfer money into your account
and will let you know if you need to curb your spending until your next paycheck.
Stop auto-payments on big bills
These auto-payments are convenient, but they are not one-size-fits-all. In other words, they can backfire if certain bills keep hitting your bank account at the wrong time. If you’re having a difficult time keeping the appropriate balances in your
account on a consistent basis, you may have to give up the convenience. Pay your bills manually so you're more aware of what's coming in and going out of your account. If you’re not willing to give up automatic bill pay, you can schedule automatic
payments to times of the month when you know your accounts will be better funded.
Rethink your budget
There’s no sugarcoating this: Overdraft fees reveal a deeper issue: You're not living within your means. Decide where you can cut back on your bills or expenses, and try to create more breathing room in your budget.
Don’t sit still. Liberate yourself from fees that add up to a lot of money over time. Employ tools that some financial intuitions make available at no cost.
A member of a credit union like RBFCU can protect their finances with overdraft protection that includes a designated savings account where funds can be drawn, free of charge, to cover an overdraft. A
credit union member also can apply for a line of credit. Yes, there is an interest rate that will be applied, but if the charge is paid promptly, the interest
will add up to less than the overdraft fee. RBFCU also offers Courtesy Pay, which will cover overdrafts for less than the national
average of an overdraft fee.
For more information, watch this video on what you need to know about overdrafts.
Due to regulatory requirements, Courtesy Pay is automatically provided for checks, ACH and recurring transactions from your checking account, but you must opt in to add Courtesy Pay for your debit card transactions.
This information is intended to provide general information and should not be considered professional financial planning advice. Please consult a professional financial planner for more information.