How to Prevent Overdrawing Your Account

Categories: General Tips

One thing to avoid as you begin to be more financially independent is overdrawing your account. Overdrafts happen when you make a purchase that pushes the balance of your checking account negative. This can have a few negative ramifications including not having the funds to cover bills and being charged overdraft fees.  Here’s what you can do to prevent this stressful, credit-affecting situation.

Check your balance regularly.

Log into your online account regularly to check your balance. This can help you stay aware of a potentially low balance. Studies show that on average, overdraft fees from debit cards tend to come from small purchases of $24 or less. Keep that in mind as you keep an eye on your checking account through your financial institutions mobile app.

Opt in for low balance alerts.

Many financial institutions can send you alerts by text or email about the balance in your account. You’ll receive a notification when your account hits a certain amount. We encourage you to track your spending and monitor your bank account regularly, but opting into alerts is a good backup. 

Stop using the account.

If your balance is getting low or your budget indicates some bills are about to be charged, put a pause on spending as soon as possible. Take a look at your balance and the outstanding charges you might have, and make sure the number left will still be in the green. 

Transfer money in.

If you have a savings account in addition to your checking account, transfer some money as soon as you can. And give yourself a cushion balance above what you regularly spend each month. By moving funds over quickly, you’ll avoid possibly overdrawing your account and the fees associated with it. 

Talk to your financial institution about overdraft protection options.

Also known as overdraft coverage, overdraft protection is a set of options offered by financial institutions to cover funds up to a point if your account goes negative. Discuss these options and how overdraft protection works for your account with an expert at your bank or credit union. 

It might be time to open or reconsider your checking account options.