Paying overdraft fees can put a real pinch on your bank account, but there are a few things you can do to dodge them. Here are several tips to avoid overdraft fees altogether.
Read the fine print
Before you choose a bank account, it’s important to check the bank’s terms and conditions, especially when it comes to fees. While banks are no longer allowed to automatically charge overdraft fees without your consent, it’s easy to opt in for overdraft protection without realizing it. Don’t get caught off guard with “protection” you may not need.
Opt-out
For years, many consumers were unaware that they were being “opted in” to overdraft protection programs. However, starting in 2010, federal regulations shifted and required that banks get consumers’ consent to opt into overdraft protection.
To make things simple, however, you can avoid overdraft protection by not signing up for it with your bank. If you’re currently enrolled in this service, you can cancel it. This way, if you don’t have enough in your account, your purchase or transaction will get declined. While you won’t be able to make the purchase, you also won’t be hit with an overdraft fee.
Don’t be afraid to ask your bank to waive the fees
If you were recently charged an overdraft fee, don’t be afraid to ask the bank to waive it. If you’re a “first-time offender,” your bank should be able to waive the fees within a few business days.
Get paid earlier with direct deposit
One reason that people experience overdraft charges is that they don’t get paid quickly enough. You may even still deposit paper checks and wait for the checks to clear before you see your money. Both of these scenarios can inhibit your ability to budget and can lead to overdraft fees.
With Chime’s early direct deposit feature, you can get paid up to 2 days earlier¹ than traditional banks. Your money is available when your employer sends the funds, giving you peace of mind.
Check your balances regularly
One major issue with traditional banks is that it takes time for transactions to update in the mobile banking app. Choosing an innovative account option like Chime, however, speeds up the transaction process. Chime provides you with real-time alerts for each transaction, allowing you to stay on top of your finances.
Double-check your budget
If your account is going into overdraft regularly, it may be time to evaluate whether this is highlighting an issue such as overspending. In some cases, it can mean that it’s time to tighten the purse strings and go on a spending diet. You can also consider looking into budgeting apps to get some extra support.
Build up your emergency fund
Some people end up overdrafting when an emergency pops up. However, as a reminder, having overdraft protection is not the same as having an emergency fund. When an unexpected expense occurs, the last thing you’ll want to do is shell out money for banking fees.
How much should you set aside? A good rule of thumb is to save 3 to 6 months of living expenses in your emergency fund. Your fund should also be kept separate from your regular checking and savings accounts.
Switch to a fee-free account
The best way to avoid hidden fees altogether is to switch to an account with no hidden fees² like Chime. With an account through Chime, you don’t have to worry about incurring fees for insufficient funds. Instead, any payments or withdrawals that would result in a negative balance are simply rejected.
As you can see, the less you have to worry about fees, the more you can focus on building the lifestyle of your dreams. Are you ready to take charge of your finances and stop paying overdraft fees?
