All Women's Talk

7 Tips on How to Avoid Overdraft Fees ...

By Jordin

Knowing how to avoid overdraft fees is a good way to save yourself a little money! Not only do you save the money you spend on the overdraft fee, but you also have money left in your account so you aren’t bone dry until your next paycheck. Over drafting is a pain, but there are ways to avoid it. So keep reading to learn how to avoid overdraft fees!

Table of contents:

  1. Give yourself a buffer
  2. Don’t rely on your available balance
  3. Try the envelope system
  4. Get a line of credit
  5. Balance your checkbook
  6. Don’t sign up for automatic payments
  7. Link your savings account

1 Give Yourself a Buffer

Knowing how to avoid overdraft fees is a smart thing to learn. My number one tip is to give yourself a buffer! Pick a buffer that works for you, say, $100 or $50. Once your account has slipped down to that balance, then stop spending. It’s as if that money doesn’t exist. This can also be emergency money, so it’s a good tip to adhere to.

2 Don’t Rely on Your Available Balance

Many times, people check their bank accounts and read their “available balance” to see how much money they have. The mistake in doing this is that often, the available balance doesn’t reflect purchases made that day or even two or three days prior! Some businesses can have money pending for a couple business days before it actually leaves your account.

3 Try the Envelope System

The envelope system is a good way to avoid overdraft fees AND overspending. On payday, with draw the amount of money you plan to use for groceries, gas, bills, and leisure spending. Divide the money into envelopes accordingly. Now, once the money is gone, that’s all you get for that week. No dipping into other envelopes or using your card!

4 Get a Line of Credit

If you open a line of credit with your bank, then it can act as backup money in case you overdraft. You will still be charged a small fee, and of course you will need to pay back the money that went onto your credit card, but the fee is generally a lot smaller than the $35+ overdraft fee that many banks charge!

5 Balance Your Checkbook

The best way to know how much money you have in your bank at all times is by balancing your checkbook weekly. Write down every single expense, and then subtract from your total balance. By keeping track of your balance yourself, you will know exactly how much you can spend!

6 Don’t Sign up for Automatic Payments

Signing up for automatic withdrawals of your bills can be convenient, but there are risks of over drafting. You may be better off to pay manually so you know for sure that the electric/water company isn’t overcharging you by accident. You can also use another account to pay bills in case your common account is close to being empty.

7 Link Your Savings Account

You can always link a savings account to your spending account. This is a nice little cushion in case you overspend one week! The only downside to this idea is that you risk spending your savings without meaning or wanting to.

I would be lying if I said I hadn’t experienced the horrors of over drafting more than once. But these tips have been a lifesaver in helping me keep my money in order and avoid over drafting! Do you have any tips for avoiding overdraft fees? Please comment below, and thanks for reading!

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