Reality is that many people are living from paycheck to paycheck. There is no room for error or unexpected events in many homes throughout the world. So, what happens when you bounce a check or take more money from your account than you have in there? I can tell you what happens, a chain of events that can take months to recover from because the fees and charges become overwhelming. It is therefore important to have some ways to avoid these fees altogether.
The first thing you need to do is be sure your checking account has overdraft protection from the bank. Although this protection is not free and the bank will charge you if you have to use it, it does help with a couple of issues. The first being embarrassment when you are in a place and your account is declined or when a check you wrote to a friend bounces and they have to tell you. This will avoid all of that and more. The other thing it will avoid is additional charges by the merchant. So, instead of two sets of fees you are down to one.
Another thing that I do with my checking account is leave extra in the account that is not written in my register. When I have it, I make sure to leave at least $100 in the account that does not figure into my checkbook. This means if for some reason without realizing it I write a check for a few dollars more than I have, I know I am covered. I try hard not to use this like this, but it helps knowing it is there and I will avoid charges for overdrawing my account.
Finally, it is important to create a budget. Be sure that what you are taking in each month is more than what you must put out. If the numbers don’t work, reality says that you will eventually be charged for overdraft fees and that will set you even farther behind. Once you do a budget, be sure the numbers do go in the right direction even if it means taking actions such as cutting back or getting a second form of income.
We all make mistakes and sometimes those mistakes are costly. My only hope is that these tips and a little common sense will help both you and me avoid fees that neither of us want to pay.