Overdraft fees can hit you hard.
Being charged overdraft fees – a fine charged by a bank when you spend more than you have in your account – can be extremely damaging when you’re on a tight budget and every dollar counts.
When you accidentally swipe your debit card for a coffee and some gum at Wawa when your account is already low, you could end up paying 8 times the cost of the items in fees, since overdraft fees typically range from $25 to $35 per transaction.
If multiple transactions go through before you notice, you will be charged a separate fee for each one, draining your account further. When you’re already struggling with your budget, these fees can be punishing. They can cause a ripple effect – making it harder to pay rent, buy groceries, and afford gas.
What’s worse? – if you don’t repay the negative balance quickly, the bank could close your account, so you won’t be able to access banking services in the future.
How do you avoid paying overdraft fees?
- Switch to a credit union or online bank with lower fees or, even better, with overdraft forgiveness policies.
- You can opt out of overdraft protection, which prevents transactions from going through if funds aren’t available.
- Many banks offer alerts for low balances. Turn them on!
Ultimately, the best way to avoid being charged fees by the bank is by tracking your spending, by checking your balance regularly and staying on top of your budgeting.
Overdraft fees are a financial trap that is easy to fall in to, but possible to escape with the right habits.
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