The best way to prevent overdraft fees is to know your daily balance, manage your monthly budget and try not to spend more money than you have available, but mistakes do happen. Below are some habits you can adopt to reduce your chances of being surprised by an overdraft fee.
Track your balance. These days, online and mobile app banking are common ways you can check your account balance anytime, anywhere. Regularly reviewing your account will keep you informed and help you spot potential fraud, should you notice anything out of the ordinary.
Don’t let the float sink you. One of the most common ways overdrafts happen is when a customer spends money that has not yet been deposited. Generally, cash and direct deposits process before withdrawals on the same day – if the deposit covers that day’s withdrawals, you should be safe from an overdraft.
Read your agreement. Take the time to read and understand your bank’s overdraft policies. You’ll receive a deposit account agreement and schedule of fees when you open an account, and these agreements include information such as fee limits or recurring fees.
Consider a back-up plan. With Gate City bank, you have a choice of two different options for overdraft protection: savings or credit. Ask about linking your savings as a back-up to your checking account1 to avoid overdrafts, or apply for a checking reserve line of credit for those unexpected expenses when you need it. With this offering, you borrow against your own line of credit to cover overdrafts on your checking account. You can work with a lender to learn more about specific terms and limits.
1Optional protection automatically transfers available funds from your savings to your checking account when an overdraft would occur. $5 fee per automated transfer.