We all experience at some time or another and it always hits hard. Overdraft fees are a plague on the under-paid that have become an unavoidable nuisance. Banks and other companies make a lot of money off of the short term loan industry which profits every time you overdraft, take out a payday loan, or use your car title for extra cash. The government has tried to impose restrictions on this industry, but it is an unavoidable part of out consumer culture. Here are some ways to help you avoid certain fees and not overdraft anymore:
Keep a Ledger
One of the biggest reasons people overdraft is because of the convenience of electronic payments. When you walk into a store and swipe your card instead of paying cash, you tend to think of your funds as a more detached idea rather than a physical asset. It might seem like a lot of work, but writing down all of the money you spend in a checkbook will really help you know where all of your money is going and see where you can make possible cuts.
If you have a smartphone, there are services like Mint and Manilla are easy to download to help organize and track all of your spending into neat little subsections.
If you know that you are going to need extra money a certain week for a service, or have to undergo an emergency medical procedure; try to allocate resources by cutting spending in another area. If you know your car is going to break down soon, try asking a co-worker for a ride to work. If you are going to struggle with rent money, try eating off-brand or cheaper food for a couple of days. This step takes a lot of sacrifice, but it is better than paying pesky fees to the bank. When cash is needed you still can find ways to fund your emergency expenses without pulling out too much cash, this is one of several reasons to get a credit line. It can act as a reserve that only you have access to when it is absolutely necessary.
Keep Track of Your Subscriptions
Netflix, gym memberships, domain names, and entertainment; they all charge a fee that your bank account automatically debits every month. While it may seem neat that you don’t have to worry about sending in a bill, you are running the risk of overdrafting. In order to gain more control, call a customer service rep and ask if you can receive the standard paper bill as a confirmation every month.
Keep a Credit Card
If you are one of the countless people suffering from massive credit card debt, this strategy might not be for you. If you are in good standing with credit card companies, it is an excellent idea to keep an extra card on you in case of emergency. You can pay back your emergency spending over time and will not be charged as much interest if your rates are low.
Overdraft fees are not going away any time soon. In order to beat these pesky charges, the best offense is a good defense.