An "overdraft" (or "NSF" for nonsufficient funds) occurs when you don't have enough money in your checking account to cover a charge against your account. In 2023, the average overdraft fee is $35 - money that can certainly be used for more important things. Mistakes can always happen, but here are a few tips that can help you avoid overdraft fees.
- Use digital banking to set up balance alerts. Set up a text, email, or in-app notification to let you know when the balance in your account reaches a set amount.
- Use digital card controls. You can set limits on how much can be charged to your debit card, where your debit card can be used, and more to help with budgeting. (For example, if you don't want to use your debit card online, you can turn off internet transactions.) You can even turn your card off. (Which is also a great way to prevent fraudulent use of your card.)
- Set up direct deposit. When you set up direct deposit, your funds are automatically deposited to your account - you don't have to make a trip to the bank to deposit a paper check.
- Use digital banking to monitor your transactions. Keep track of your transactions, balance, and upcoming payments. Keeping an eye on your account can help you identify potential issues before they cause a problem.
- Link your accounts. Open a savings account or line of credit and "link" it to your checking account. That way, if you overdraw your checking account, the funds will automatically be transferred from your savings account without a fee.
- Use the payment method that works best for you. For example, setting up an automatic payment might not be a good idea if you lose track of time or forget the money's going to automatically be withdrawn from your account.
- Establish a budget. If you budget $100 for groceries but spend $200, you'll know you're at risk for overdrawing your account unless you make up the difference. (You can find several tips and methods for budgeting in our Financial Wellness Blog.)
Using these tools does not guarantee that you won't experience an overdraft.
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.
