There’s really nothing positive about overdrawing your account. It ranks right up there with having cavities filled. Both fill me with dread and cost money and time to fix. And in the case of cavities and overdrafts, the best remedy is prevention.
How do you prevent overdrafts? Like cavities, it takes daily upkeep and having some insurance in place. The good news is the daily ritual is way less painful than flossing.
Awareness of your balance and pending transactions is the first step to preventing overdrafts. There are very few of us who would knowingly overdraw our accounts (except in an emergency, but I’ll get to that later). It’s a good idea to log in to UBTgo Online & Mobile Banking on Mondays and take a look at what is going on with your account. If something went wrong over the weekend, you’ll have by the end of business on Monday to fix it. On a daily basis, you can use the Quick Balance feature on the mobile app to quickly check your balance. You don’t even need to enter your password, making this a super-quick way to keep an eye on your account.
e-Alerts are a great tool you can set up as an extra layer of protection. You can set up alerts to receive a quick message for low balance, large transactions, and many other kinds of transactions. This is a very helpful tool if you’re forgetful about checking your account regularly.
Sometimes cavities happen, which is why I’m glad I have insurance. Like insurance, there are backup plans available for your account to help protect you from overdrafts. Most banks have a couple of options. Automatic Transfers from another deposit account are usually available for a small fee per transfer. If you have an emergency savings fund built up, this might be a good option for you. Be aware that most savings accounts have limitations on the number of transfers per month that are set by the Federal Reserve, so you’ll want to be careful about overusing the service.
The other option is a line of credit that is attached to your checking account. Sometimes these have either an annual fee, or a per transaction fee, or both; in addition to interest on whatever amount you use. However, these fees are lower than overdraft fees, so it is a better option if you know your account could go negative fairly often.
ATM and Point of Sale Debit Card Purchases
Customers have a choice whether to participate in a bank’s overdraft program. Additionally, customers must choose to opt-in before the bank can charge you a fee to process point-of-sale (POS) or ATM transactions that exceed your account balance. This is called the “opt-in rule” – if you do not opt in, the bank will decline your ATM withdrawals and debit card transactions at POS terminals if you do not have enough money in your account to cover the withdrawal or purchase. If you do not opt-in but the bank pays an ATM or POS item when your account is overdrawn, the bank cannot charge you an overdraft fee.
Hopefully these tips are helpful to you in preventing overdraft fees. Looking for more tips on what to look for in a free checking account? Click here.
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