6 Ways to Prevent Overdraft Fees

Debit cards and checking accounts are appealing because unlike credit cards, you won’t be tempted to spend money you don’t have. That’s what most people think. The reality is that you can opt into overdraft protection to work around this limitation. With this service, you can complete transactions that exceed your account balance any time. Sounds good, right? Not so fast, my friend.

Ask any consumer advocate and they’ll probably advise you against opting in. That’s because doing so will get you face to face with those dreaded overdraft fees.

What’s a Bank Overdraft Fee?

Let’s say you’re withdrawing money from an ATM, writing a check, or making a debit card purchase. Opt out of overdraft protection and your transaction will simply get declined. Opt into the service and each transaction that exceeds your account balance goes through.

Here’s the catch: this convenience comes at a price—$35 per overdraft, to be exact. Some banks even charge you $2 to $5 per day until your bank account is no longer in the red.

Banks Love Overdraft Protection

The fact is that overdraft fees rake in substantial profit for banks. In fact, American consumers have paid a whopping $34.3 billion in overdraft fees in 2017 alone. That’s how much banks have earned from overdraft protection.

The sad part is that half of the consumers whose accounts have gone into overdraft don’t even recall opting in. So if you suspect that you’ve unwittingly opted into overdraft coverage, call your bank and ask to opt out.

6 Ways to Prevent Overdraft Fees

At the end of the day, all you need to remember is that overdraft fees are avoidable. Just download loan apps like Earnin app, follow these financial management tips, and you’ll effectively reduce the risk of incurring such a costly penalty.

1. Opt out of overdraft protection

Do this and your bank cannot cover one-time ATM or debit card transactions. You won’t get charged with overdraft fees for them, either. Without this coverage, any transactions that make your balance negative will be declined. Banks can still cover recurring debit transactions and checks without your permission, though.

2. Monitor your account balance and transactions

It’s really easy to check your balance and account transactions these days. You don...

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