We've all felt that moment of panic after swiping a debit card: Is there enough money to cover this? Did I add money to this account recently? If your answer is "no," you might have an overdraft fee heading your way.
Overdraft fees are annoying and unnecessary, and they can seriously hamper your financial aspirations. Take the time to review these 10 tips that'll help you avoid overdraft fees.
But first, a word about overdraft "protection"
Your bank has probably already offered you "overdraft protection," but it's worth noting those policies don't protect you from overdraft fees. Instead, overdraft protection means you'll still be able to use your debit card, even if your account can't cover the charge. You'll have to pay that money back – with the added overdraft fee.
Instead of relying on overdraft protection, you might want to link your checking account to a savings account. This service allows you to avoid fees by dipping into your savings to cover any overdrafts.
Go paperless, but remember to check your email
E-billing doesn't just cut down on paper waste, it's also a convenient way of keeping all your bills in one place. For many of us, checking email is a part of the daily routine, which means you'll get regular reminders of your bill payments.
Paper bills can get accidentally recycled with junk mail, and they create clutter when you hang onto them. Emails, on the other hand, live in near perpetuity in your inbox. If you're preparing for winter months, you can search for last year's bills to get an idea of how much you'll spend on heating.
Embrace convenience with automatic payments
For most types of bills, there's no reason why you shouldn't sign up for automatic payments. The service ensures your bills get paid on time, which saves you on any potential late fees.
One cool feature you might not already take advantage of is scheduling your payments. Most autopay services default to paying off bills as soon as they're ready for you, but you can also plan those payments to keep from accidentally triggering an overdraft fee.
Use direct deposit
Direct deposit is kind of like automatic bill payments, but in reverse. The service puts your paycheck directly into your account, straight from your employer. You'll save a trip to the bank, which is convenient, but direct deposit is also the fastest way to get your money.
Even after you deposit a physical check, there's usually a small delay as that check is processed. If you want to make sure you've got money the morning you wake up on payday, direct deposit is the way to go. Cutting down paper waste is a nice bonus, too!
Have your account tell you when it's running low
Whether you're worried about running low on cash or not, it's a good idea to set up some alerts for your primary bank accounts. You can customize these alerts as you see fit, but at the bare minimum, you should have a "low balance alert" in place. That'll let you know when your balance dips below a certain amount, either via text, email, or whatever else you set up in your account settings. This can be a lifesaver when small purchases start adding up.
You may also want to turn on "suspicious activity" alerts, which will let you know if charges to your account seem out of place.
Take time to write it all down
Remember how organized you used to be in school? Those planners were great for mapping out your week of homework projects, tests, and afterschool activities. As an adult, those same planners can help map out your financial life. Sit down once a week or once a month and write down bill due dates, paydays, saving goals and other major financial events. Once this becomes a habit, you'll become much more aware of your finances and avoid overspending.
There's an app for that
Even if you don't want to go old school and write everything down in a planner, you should still set aside time every month to go through your finances. Financial planning is the easiest way to avoid overdraft fees, and lots of apps specialize in just that: Mint, You Need a Budget and Wealthfront, to name a few.
While the details vary from app to app, they all compile your entire financial life into one place. You'll see your checking and savings accounts right next to any credit card debt, upcoming bill payments, or investment portfolios you may have. Some apps focus more on financial planning and investment, while others emphasize debt reduction and credit score improvement. Try a few out and see which one you like best.
Another simple way to avoid overdraft fees is to use credit cards whenever you can. It's an especially good idea for small purchases, which many forget to include in their budget. You may not think much of that quick grocery run, but at the end of the month those $5 and $10 purchases can add up to more than $100.
Credit cards give you time to move around money and pay off those purchases all at once, and you can shop around to find one with a cool rewards program. Just remember to actually pay it off! If you don't check it at least once a month, credit card debt can easily get out of hand.
Communicate quickly, honestly and often
If it's too late and you've already charged too much to your debit card, reach out to your bank immediately. Let a representative know what happened, and be absolutely honest about the situation. Any misstatements will come back to bite you. If you respond quickly, your bank may offer a line of credit or even overdraft forgiveness.
Don't be afraid to shop around
Even if you aren't a millionaire, banks are actively competing for your business. They want you to keep your money with them. Shop around and look for a bank that offers low overdraft fees, lines of credit, account linking, or overdraft forgiveness. You should still try to avoid overdrafts, but it can't hurt to have perks like these as a backup.