Ensure Your Account Doesn’t Go in the Red

There’s nothing worse than making a quick trip to the gas station or grocery store and, after swiping your card, seeing the dreaded “declined” or “insufficient funds” notice. Not only can you not afford what you came to buy, but you have also more than likely just landed yourself with a new overdraft protection fee.

Some banks offer one-time forgiveness options and will waive your fee, but if you find yourself continually incurring overdraft fees, you may want to reconsider your spending habits. Luckily, all it takes is a few easy tricks to take back control of your spending and stop the overdraft cycle for good.

At First State Bank, we understand that mistakes happen and have compiled a list of five tips to help you prevent any future overdraft protection fees.

1. Know Your Bank’s Overdraft Policy
How can you follow the rules if you don’t know what they are? Different banks offer a variety of overdraft options. Some banks will allow you to overdraft your account or let the available balance drop below $0, and as a consequence, they will either pull funds from a linked account (e.g., a savings account) and/or charge an overdraft, maintenance or service fee.

You may also have the option to opt out of overdraft protection. This option prevents you from making any purchase that will put your balance below $0 but may also incur an “insignificant funds” service fee.

2. Utilize Direct Deposit
If you still receive paper checks from your job or jobs, consider switching to direct deposit. It’s quicker, easier and may reduce your banking maintenance fees. With direct deposit, you can avoid having to stop by your bank or an ATM to deposit your paycheck. Many banks waive scheduled maintenance fees as a reward for loyally depositing your paycheck with them each pay cycle via direct deposit.

3. Manage Your Spending
Many people feel like they do not know where their money goes every month. If you do not keep an eye on your spending, you can see your checking and savings account balances dwindle every month, potentially leading to overdraft protection fees.

One way to manage your spending is to utilize online or mobile banking services. These services enable you to easily track daily purchases with the click of a button or the tap of a finger. Or, if you are more traditional, you can keep a journal or use another popular paper method.

Another way to get a handle on your spending is to start balancing your checkbook (if you do not already do so). Even if you utilize mobile or online banking, balancing your checkbook allows you to see your available account balances before checks and purchases are actually posted.

4. Use Cash
A great way to keep from incurring overdraft protection fees is to simply keep your plastic in your wallet. Have you heard of the envelope budgeting system? It’s quite simple. Figure out how much you plan to spend on groceries, gas, entertainment, etc. Once a month, withdraw a set amount that meets your budget. If you’ve allotted $100 for each category, you’d withdraw enough to fill each envelope and only spend as much as is in the designated envelope each month. This is a great way to track your spending, because if it’s not in your wallet, you will know you can’t afford it.

5. Include a Safety Cushion for Unexpected Expenses
Many banks recommend that you keep a minimum balance within your means for your checking and savings accounts. That way your balances will not drop below a certain amount (e.g., $500). In the event of an emergency, unexpected expense or rare impulse buy, you will not overdraft your account or incur service or maintenance fees.

To learn about First State Bank’s overdraft policy, we encourage you to contact us here or give us a call at (940) 665-1711.