5 Tips to Avoid Overdraft Fees

An overdraft occurs when your financial institution allows a transaction even though your account doesn't have sufficient funds. Although it's a flexible arrangement, it can also become an inconvenience if it occurs regularly. The following tips will help you avoid overdraft fees and meet your financial goals.

1. Track your account balance

Financial institutions provide alerts for various transactions. You can enable them whenever your account balance goes below a particular threshold. These prompts are crucial to avoiding overspending. They give you the chance to transfer more money into the account or skip unnecessary purchases.

2. Decline overdraft coverage

It's possible to set up your debit card to avoid overdraft fees. The system declines your transaction whenever your checking account lacks enough funds to complete a purchase or ATM withdrawal. However, overdraft fees might still apply to other transactions, such as automatic payments and written checks. Apart from debit cards, cash also helps you limit your spending and improve your monthly budget.

3. Implement overdraft protection

This service helps you avoid overdraft fees by automatically topping off your checking account with funds from the savings account. The system can transfer the exact amount you need for a successful transaction. Although this service might cost a few dollars, it’s still significantly lower than typical overdraft fees. You only need to ensure your savings account has enough funds.

4. Set up a line of credit for your checking account

A line of credit linked to your checking account is convenient if you run short on funds. This loan helps you avoid bouncing checks, declined debit cards, and missed payments. While your credit union or bank charges interest on the borrowed amount, it's still lower than overdraft fees. The latter can cost as much as $35 per rejected transaction. This amount can add up to hundreds of dollars as overdrafts increase.

5. Create a cash buffer

One of the best ways to avoid overdraft fees is having a minimum account balance at all times. Extra money in your checking account helps cover transaction delays and miscalculations. It’s also advisable to promptly replenish any amount that flows out of your account through payments and other regular transactions.

At Clark County Credit Union, we offer our members the best financial solutions to avoid overdraft fees. One of them is Overdraft Pay, which covers the cost if your account has insufficient funds. We also design our checking products to provide convenience and value for money. Contact us today for more details.