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The best tips for avoiding overdraft charges may be to connect your bank account with a savings account, sign up for a line of credit through your bank, and always keep an extra amount of money as a cushion in your account. Some people are also very diligent about writing down all balances and keeping tabs on their checkbook, both in writing and on the computer through certain programs. Signing up for overdraft protection may also protect you from some overdraft charges, but you may still incur a fee from your financial institution for overdrawing your account balance.
Connecting your bank account with your savings account may be the best way to avoid overdraft charges, assuming that you have a little extra money in savings. This can protect you because in the event you spend more than you actually have in your checking account, the bank can just withdraw the amount you overspend from your savings account. As a result, no fee will be charged to you, but your checking account will show a zero balance. This may not be an attractive option to you if your money in savings is intended for something else, but when you weigh that against the possibility of being charged fees from your bank, it may be best to do things this way.
Another option to help you avoid overdraft charges is to sign up for a line of credit through your bank. You may not be able to do this if you do not have good credit. If you qualify for the line of credit, the bank will likely cover all your overdrafts with money from your credit line. The only fees that may be associated with this are finance charges for the amount loaned. In most cases, these finance charges are comparable to what you would pay with most credit cards and may vary depending on your credit score.
Keeping an extra cushion of money in your checking account may be the most responsible way to avoid overdraft fees. Many people deposit a certain amount of money into their checking accounts and then try to forget it is there. With this extra money, overdrafts are less likely because any amount that goes over the total you show in your ledger will simply come out of the extra money. There are no fees associated with doing this, but it may be hard for some people to forget about the extra money and avoid spending it before it can help them.
Making an effort to become more diligent about balancing your checkbook will also help you avoid overdraft charges. It is a good idea to write everything down in a notebook each time you write a check or debit something, and then compare this regularly to the balance your bank shows so that any discrepancies can be acknowledged and understood before an overdraft occurs. There are also many computer programs that help people manage their checking accounts, and the use of these in addition to writing everything down may be beneficial. Signing up for overdraft protection through your bank will keep you from incurring fees from retail stores or other places where you write checks that may bounce, but it will likely not protect you from overdraft charges from your bank.
What if someone steals your debit card and run up charges? This happened to me! Since my checking was connected to my savings, the person was able to keep spending because it kept pulling money from my savings! I abruptly canceled that feature.