What Is an Overdraft Fee?
In this case, the bank covers the cost and then charges you a fee for that service.
An overdraft fee is only assessed if you have opted into overdraft protection (also called overdraft coverage).
On the surface, overdraft protection may sound useful.
So whats the problem?
Is Your Bank Holding You Back?
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In short, overdraft fees cost a lot of money often more than you even overdrafted by.
While that sounds like a lot and it is its actually down $4 billion since 2019.
Heres how to avoid them:
Is Your Paycheck Not Going As Far As It Used To?
We get it.Everythingis more expensive than it used to be, but your paycheck hasnt kept up.
When money is tight,these resourceswill help nearly everyone.
If you are, ask to opt out.
Check with your financial institution to determine its specific fee structure.
Monitor Your Account Regularly
Gone are the days of balancing checkbooks after every check or debit card purchase.
This means you always have an up-to-date available balance right at your fingertips.
Before making any purchase online or in person pull out your phone and verify your account balance.
Youll still need to check your account balance regularly, even with these alerts set up.
Add reminders to your calendar so that you always know when money is being taken from your checking account.
Such a hold could be enough to overdraw you.
Use a Bank That Doesnt Charge Overdraft Fees
The advent ofonline bankinghas brought increased competition to the market.
Capital One later became the first top 10 U.S. bank to dump overdraft fees.
Since then, more major financial institutions have followed suit, which makes them more attractive to consumers.
Act fast to deposit money in the account and contact customer service immediately.
These two moves may help you get the overdraft fees waived or at least avoid additional fees.
you might also visit your bank in person to deposit cash.
Getting money in the account right away will help you avoid additional daily fees for being in the negative.
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Timothy Moore covers banking and investing for The Penny Hoarder.
Reporting from contributor Kent McDill is included in this report.
