NSF & Overdraft Protection
May 3rd, 2006 | by Molly's Brother |The way I look at it, carrying around your little notebook and checking it against your account balance online is an excellent way to guarantee overdraft protection. However, if you haven’t mastered tracking your expenses yet, there are other things to consider in regards to overdrawing your account and paying exorbitant fees for insufficient funds. Here are some helpful hints to avoid paying those fees:
1. Find The Right Bank Do your research. Banks are becoming increasingly more competetive to get your business. Right now, Washington Mutual is offering to waive one overdraft fee per year for new customers who open a checking account with them. (WaMu also won’t charge you for using a competing bank’s ATM. The other bank, however, will still levy their fee.)
2. Do Not Rely on Your Credit Card Credit Cards are now offering overdraft protection. But there are so many hidden costs, terms, and conditions that it doesn’t make financial sense to pay up when the credit card steps in to save you. Regardless of the amount needed to cover the overdraft, credit cards transfer a minimum of $100 to your account (even if you overspent by $5 or $10). At 9% interest to cover that overdraft, they give you 30 days to pay back the $100 that they lent you (Ninety-five of which you didn’t need, by the way). If you don’t pay back the $100 in the given time, the interest rate then jumps upwards of 30%. On top of all this, the credit card will most likely charge you a small annual fee for this “courtesy.”
3. Link Your Accounts To avoid all of this, just link your checking and savings accounts. Make sure that you have enough money in your savings account to cover any possible overdraft. You bank may charge you a small transfer fee, but it’s worth the convenience. Doing so will save you the emotional frustration that accompanies NSF fees.
4. Be Proactive With Your Finances Check your account balance daily. Don’t run your check card at a restaurant or request money at an ATM and “hope you have enough money to cover it.” Get on top of your life.
