Understanding Bank Fees Can Help You Avoid Them

Regardless of how you feel about the economy, credit card industry or finances in general, we all have one thing in common- we all need money to survive. There is no escaping the fact that you will either need cold hard cash, checks or credit cards to make necessary purchases each day.

Many of these purchases involve transactions that go through your checking account. Unlike in days gone by, writing a check is no longer the only method of making a payment from your bank account. In fact with so many options available today from debit cards to electronic payments it is very easy to lose track of transactions that can result in overdrawing your account. Banks charge customers who do not have enough funds to cover transactions overdraft or insufficient fund fees. These fees can quickly add up to hundreds of dollars making it imperative you stay on top of your finances and manage your account with precision.

The Difference Between Overdraft and Insufficient Fund Fees.

The main difference between the two fees is actually the action your bank takes in response to a transaction that hits your account that is not covered. If your bank offers some form of overdraft protection in most cases they will honor the transaction and charge you a service fee for covering the check or debit to your account. Without overdraft protection, your bank will deny the transaction and return the check or debit to the vendor noting the reason being “insufficient funds”. In 9 out of 10 cases, you will not only face an insufficient fee charge from your bank but also a fee from the vendor for having the transaction denied.

Tips To Avoid These Costly Fees.

It seems that there are fees attached to just about anything these days, some of which are unavoidable. That is not the case with overdraft or insufficient fund fees. Avoiding these fees are completely within your control. Here is how you can make sure you are not losing money paying unnecessary fees.

• Organization is key to avoid situations that could lead to overdrafts on your checking account. You will have to be diligent in keeping track of all transactions such as checks, ATM withdrawals, electronic debits, automated payments and debit card purchases. Missing just one receipt or check payment can have expensive consequences if it causes your account to become overdrawn.
• Most banks offer online services. After creating an account you can log on as frequently as you like to check your account balance. This makes is possible to spot errors before they result in an overdraft or deal with overdrafts quickly to correct your account. If your bank doesn’t offer this, consider opening a new account and get a free checking account bonus for doing so.
• Consider overdraft services that offer real protection, such as linking your checking account to a savings account. In the event your account becomes overdrawn, the bank can draw from the linked account.
• There are many free online management tools that help consumers track the best savings accounts. Consider signing up for one of these accounts which will give you one more tool to keep track of transactions posting to your checking account.

Now that you know what these fees are and how to avoid them, you are in a better position to prevent paying that extra expense.