While fees for debit card use and monthly service charges act as a hindrance on your regular spending habits, overdrafts and bounced checks (also called non-sufficient funds) are probably the worst type of fees to come across for your checking account. These types of fees can stack up and are heftier when compared to other checking account fees. Here are 10 tips to help you avoid overdraft or bounced check fees on your checking account:
1. Keep Track of Your Automatic Payments
Automatic payments are a convenient way of avoiding late fees on your monthly bills, but can lead to overdraft or bounced check fees if you aren't keeping track of them. Make sure you take note of when these funds are typically withdrawn from your account since processing times may vary between months. If anything, make sure you leave money in your checking account as padding room for 2-to-3 days during your billing cycle.
2. Stop Floating Checks
At one time, a person could write a check for a bill or payment and expect the funds to be removed from his or her checking account within 2-to-3 days, sometimes longer. This would allow people to meet payment deadlines with money they did not have, giving them several days to either come up with the money, or wait for a paycheck to clear. With the advances in technology, a check's float time has either minimized or is non-existent, especially with online check deposits.
3. Be Careful With Joint Checking Accounts
If you share a joint checking account with someone like your spouse, make sure you are both keeping track of the account balance, automatic payments and spending habits. If you know it is grocery day and your spouse typically spends $100 at the market, make sure you don't deplete the necessary funds by paying a bill or making a purchase in the meantime.
4. Wait for Deposits to Clear Before Using the Cash
Until a deposit has actually cleared and appears in your account balance, do not try to spend it. This is the same concept of floating checks, only reverse. Until you can clearly see the money in your checking account, don't assume it is already there.
5. Get Mobile or Online Alerts
Mobile or online alerts aren't just for protecting your checking account from theft or a stolen identity; they are also good for helping you manage your account balance. Online alerts can be checked while you are at home or the office, and mobile alerts work just like a text message. Set up alerts for upcoming automatic payments so you can double-check your account balance before a payment goes through. Alerts are also a good way to notify you when your balance is below a set minimum to help you avoid an overdraft or bounced check fee.
6. Review Your Checking Account Balance Regularly
Some people have the idea that they can keep track of their account balance in their head without having to actually look at a monthly statement. While this may work for some, it's quite a difficult task for most people to track all of those automatic payments, written checks and debit card transactions. Remember, even if it's only by a few cents, you can incur an overdraft or bounced check fee if you aren't careful.
7. Always Have Some Cash Handy
Many people keep $20 or even $100 on them for emergencies. This is a great way to avoid an unnecessary charge if you find yourself in an emergency situation. The last thing you want is to have to run to a non-bank ATM and incur a fee from both the ATM machine and your bank, which can affect your account balance and lead to an overdraft or bounced check fee.
8. Be Mindful of Establishments that Place Holds on Your Debit Card
If you use your debit card to reserve a hotel room or to rent a car, a hold can be placed on your card. Sometimes, people forget these funds might not be available, thinking their checking account balance isn't going to be affected until they've actually checked out of the hotel or returned the rental car. But, a quick scan of their account balance will tell them otherwise.
9. Link Your Checking Account to a Savings Account
Some banks offer overdraft protection in the form of linking your savings account to your checking account. If you ever use your debit card or write a check for a payment with money that you don't have in your checking account, your savings account will be automatically deducted to avoid overdrafts or bounced check fees. Just remember, there may be a service charge for the money transferred.
10. Get in Touch With Your Bank
If you aren't making these mistakes regularly, and you settle your account balance, you may be able to have the overdraft or bounced check fee waived. Give your bank a call and try to remain calm and courteous. The experience may be unsettling, especially if you've incurred heavy penalty fees, but lashing out won't help the situation.