The O Word: Stop Overdrafts from Breaking the Bank

Overdrafts are a friend to no one, especially your bank account. Everyone has faced an overdraft at some point or another but it’s easy to fall into habits that make them a recurring problem. If you’re hoping to makes some changes and prevent the fees from piling on, take a look at a few helpful tips that could save you heaps in the future.

  • Stay Away from Automatic Payments. While automatic payments are a very convenient option for those who find it easy to let a bill slip through the cracks, it’s just as tricky to remember when your payments are scheduled. Try to stay away from automatic payments if you can help it as they can come through when you least expect them and wreak havoc on your bank account balance. Leave your payments set as manual and so you have the option of paying late rather than overdrawing your account. If your payment comes due and you don’t have the funds to cover it, search for other options like the payday loans offered through the wonga website. You can choose the length of time you’ll need the funds for and the faster you pay it off, the less you’re paying in interest. The fees associated with short-term loans like these are often less expensive than the per item charge you’ll receive if your account goes negative.
  • Set Up an Overdraft Account. Most banks now have options for overdraft service like a line of credit attached to your account that is automatically charged when your account falls below zero. Some also allow you to link your savings account so the funds can be taken out automatically in cases when a bill slipped your mind. This can be a dangerous strategy if you don’t make it a habit to check your balance though, seeing as your emergency fund is being used to take care of business. You run the risk of wiping out your fall back method when things get tough.
  • Don’t Opt In to Overdraft Service. New changes to the banking world are going to be making overdrafts significantly more costly, which makes it even more important you understand what’s available to you. Ask your bank to decline your transactions when you don’t have the money available, instead of letting you swipe away your debit card to your heart’s content. If you know yourself and know you can’t be trusted to keep an eye on your balance, don’t leave it up to chance. Some banks automatically opt you into their overdraft service, meaning your card will allow you to spend more than you have for dire situations when you need something and don’t have any other options. But overdrafts generally do more harm than good and if your bank can prevent those fees from snowballing by simply stopping the transaction, you may be better off.

You may not even realize that some of these are options, which is why speaking to your bank may help you get a better idea. But with overdrafts getting higher and higher, make it a priority to make some changes to your finances that will help in the long run.

7 Tips to Avoid Rising Bank Fees

No matter who you are or what you do using a bank for some transactions is always going to be necessary. Unfortunately many banks these days are starting to charge fees for services that used to be free and also increasing their fees on all of their services. It doesn’t matter who you are or how long you have been with the bank you are probably saying some of these fee increases. With that in mind, we’ve put together a list of seven Tips that you can use to avoid these rising bank fees. Enjoy!

First and foremost it doesn’t matter how long you have been with the bank you are with you can always ask for a better deal or for certain fees to be lowered. If your bank won’t consider doing this then it may be time to find a new bank. Many people are using credit unions because they offer lower fees and other attractive items that corporate banks do not offer.

Maintaining a high balance in your account is one of the best ways to avoid extra fees many banks have four people that do not keep a minimum balance. If this isn’t possible for you talk to your banker to find out what other products they may have that can help you.

Today many things can be done with online banking so unless you actually need to see someone face-to-face you should look into setting an online account up for yourself. Many online banks offer excellent rates on their savings accounts and also will help you to keep much better track of your financial situation. Also keep in mind that while some brick-and-mortar banks will offer you online banking services many of them have high fees to do that.

If you opened an account to take advantage of a promotional offer or to earn some extra money make sure that you don’t close those accounts to early. The reason is that many banks will now charge a fee to close accounts if someone closes them within 180 days of opening them.

If you make a lot of purchases from overseas retailers or service providers make sure that your bank is not charging you foreign transaction fees which can be very high depending on the transaction that you’re making.

One of the most vital services to look for with any bank is a free checking account. The fact is that many banks these days are offering free checking accounts to try and stay competitive. Take a little time and do some research to find one that fits your needs.

Finally, and maybe most importantly, make sure to review your bank notices regularly. The fact is that even a small error every single month can add up to a lot of money at the end of the year. Make sure that you read every statement whether you have statements mailed to you or are doing your banking online to make sure that there are no errors and also to make sure that there are no charges that you did not authorize.

These seven tips should help you to save a few bucks with your bank. Remember that banks are businesses also and that they are fighting to keep your business. Don’t be afraid to ask for things that they might not have offered and don’t be afraid to look around for another bank if you’re not getting what you want.

The Dwindling Round Up: 10-17-12

Here at the Dwindling Round Up we discuss the weeks 5 best posts, in our humble opinion anyways.  With the plethora of finance sites to choose from this is no easy task.  The topics vary, however, the quality of writing does not.  Each article is well thought out, interesting in nature, and just a plain good ole read.

 

Buying and maintaining a car is a huge expense, and one that most us endure one time or another in our lives.  Making Sense of Cents tells us to buy and maintain our cars from a used dealership, stop by and see why.

When is the right time to have a baby, financially?  Ahhh yes, the age old question.  Work Save Live attempts to tackle that question in this article.  I have to say I’ve found myself asking this same question as of late.

Objective Wealth gives us some tips on how to manage a windfall!  Granted I may never experience one of these (no matter how many twinkly little stars I wish upon), but if I ever do then I will know exactly how to manage it all.

We all dream of financial freedom, but so few of us ever achieve it. See Debt Run provides us some shortcuts on how to get there.

Read up on Money Beagle’s shady bank story…there’s nothing worse than big bad companies who beat up on the little consumers…this bothers me to no end.

Do Overdraft Charges Affect Your Credit?

When your check clears your bank account and you do not have enough funds to cover it, the bank may pay the check as a courtesy to you. Your account will have a negative balance, called an overdraft. Financial institutions do not report overdrafts to credit bureaus. However, if the negative balance remains unpaid, the bank will report it as a balance owed. In this case, it will affect your credit history and score. Overdrafts can also affect your credit file in several indirect ways.

 

Depending on a financial institution, overdraft fees can be as high as $35 or more. If you have several checks coming through and not enough balance to cover them, the bank will return them and charge an overdraft fee for each bounced check. The fees can add up to several hundred dollars. If you are unable to pay the fees, your account will be referred to a collector after 3-4 months. Collection accounts are reported on your credit file and may remain on it for up to seven years even after being paid off.

 

If you don’t pay the negative balance created by an overdraft, the bank can file a lawsuit and garnish your paycheck. Writing bad checks is illegal. Banks can press criminal charges against you if you continue writing checks without keeping enough funds in your account to cover them. Criminal charges and garnishments are reported to credit bureaus and will lower your score and may prevent you from obtaining credit.

 

When a check bounces, the payee will attempt to collect his or her money by contacting you. If you fail to pay them, they can also send you to collections. If you pay a bill and your check bounces, your account will be past due. Delinquent accounts are also reported to credit bureaus. The payee can also file criminal charges against you for check fraud.

 

If you are a first-time offender and bounce only one check, you bank will likely forgive you and may even refund the overdraft fee. However, do not make it a habit. If you continue writing bad checks, the bank can close your account and report it to ChexSystems. CheckSystems is not the same as credit bureaus, but having a record there may prevent you from opening a bank account at another financial institution.