A few months ago, I wrote about how you can try to talk your way out of an overdraft fee. On Thursday, I was again reminded of how it seems like people still are having problems managing their money. Every morning I check the overdraft report. This report tells me who has gone overdrawn, and if necessary, I shut down their debit card. A typical day will show about 25-30 people on the report. In the past few weeks, we’ve been averaging 50-60! That’s double the amount! It amazes me that people pay $30-$36 for an overdraft charge, yet continue to use the account.
The number one cause of people going overdrawn is due to the lack of a check register. How can you know how much money you have available to spend if you don’t have a record of what you have spent? Online banking, telephone banking, and asking the tellers for a balance are not reliable methods of tracking money. They don’t know what checks are outstanding or what check card transactions haven’t posted yet.
The “posting” process confuses people, or they don’t fully understand it. My bank doesn’t make checks available until the next day, so if I make a deposit one business day, the funds aren’t available until the next business day. I make sure the deposit clears and is available before I write any checks off of it.
There are methods of overdraft protection. You can link your savings account as a buffer, and in case you go overdrawn, it will transfer the funds into your checking account to cover. You can apply for a line of credit that will cover items if you do go overdrawn. Sometimes there are monthly fees for that. I know there are people that keep a $100-$200 buffer in their checking account by pretending that money is not even the account.
How do you keep from getting overdraft fees?