How to Avoid Expensive Bank Charges and Fees

While a lot of people complain about the charges their bank hits them with, most of those charges are actually the consumer’s own fault.  The vast majority of bank charges result from someone overdrafting their account and, if you’re careful, you can avoid doing this. 

Overdrafts

The main thing to remember is that a bank is under absolutely no obligation to lend you money to cover even a penny of overdraft, if you don’t have an overdraft set up in the first place.  Overdraft fees are very expensive. 

In addition to the overdraft fees, you may be hit with interest payments that the bank charges for loaning you the money.  All in all, you could easily end up paying more in overdraft fees than the total amount of the check you wrote.  If you want to avoid this, the answer is very easy: be responsible, and monitor your band account regularly to avoid going overdrawn.

Amazing Disappearing Money

When you know you have a sum going into your account because of a direct deposit or because you just deposited a check, it’s sometimes tempting to write a check against your account immediately.  This is never a good idea.  When you do this, you’re assuming that the money will hit the bank when you need it to.  There’s no guarantee that this is how it’s going to happen.  If the money hits the bank a day after you write a draft against your account, you’re going to be hit with overdraft charges. 

Attached Savings

A popular way to avoid the costs of getting overdraft fees at your bank is to have your savings account attached to your checking account.  If you overdraft, your savings account will be drawn upon to cover the cost.  Most of the time, there is a charge for doing this, but it is much less than the cost of an overdraft.  Check with your bank to see if this program is available.  It is usually called overdraft protection.

Opt Out of Credit Cards: Use a Debit Card Instead

While this won’t always be the case, there is a much better chance that a debit card, when it is run through machine, will directly check your bank account to make sure you have the money in there to cover the charge that you’re making.  If there’s no money in there, the card will be declined.

Opt out of any overdraft coverage programs that your bank offers to avoid their fees, and just get used to the idea of being declined if you don’t have the money.  It might be a little bit embarrassing once in a while, but it’s better than being hit with overdraft fees that put your account deeper into the negative.

Ask Questions

When you open up an account at a bank, sit down with them and ask them about what fees they charge.  Even if you have a free checking account with very little money in it, you are a customer and they should be willing to tell you about it. It’s your responsibility, however, to read any literature that the bank gives you about what the charges are for overdrafts and whatever other services the bank offers. 

Most importantly, remember: only write checks that are covered by money you already have in your account, not money that is on the way to the bank.