How to Avoid Overdraft Fees

Written by
Peter Dunn

Americans are up in arms over the outrageous overdraft fees that are being charged by banks today. You know how it goes...your account runs out of money, and your bank just punches you in the face with overdraft fees until you replenish your account. Many of us have had that $40 cup of coffee ($4 coffee and $36 overdraft fee). Banks, including Chase, reorder your transactions on any given business day to make sure that bigger purchases clear before smaller purchases. The result: tons of overdraft fees on small purchases. Banks are clearly taking advantage of people who chose not to practice the art of financial awareness.

But don't get it twisted. I'm not the guy to yell at the blanks, my job is to yell at YOU. I'm not going to ask the banks to stop bailing you out of dumb financial situations. You need to take responsibility for your actions. That being said, I would rather banks simply have your debit card decline, opposed to extend overdraft protection. Here are Pete the Planner's 5 Tips for Avoiding Overdraft Fees.

  1. Know your banks policy. Sounds pretty obvious, but it's likely that you aren't operating on a fair playing field if you don't know the rules. If you are aloud to opt out of overdraft protection, do it. I would rather you be embarrassed by a card decline, then get drilled with hundreds of dollars worth of stupid fees.
  1. Count your transactions. Forget overdraft protection for a second, if you don't know how many times you actually handover your debit card, then you have bigger problems to deal with. You shouldn't use your debit card more than 10 times per week.
  1. Use cash. Old fashioned, I know. But it is the ONLY true way to not have overdraft fees. It is the abstinence of the financial world. Awkward...
  1. Visit your online banking account frequently. I generally don't advise that you hover over your money, but if you have an overdraft problem, then be sure to use online banking. Not even the dumbest people in the world would spend money that they see that they don't have.
  1. Communicate with your partner or spouse. Many overdraft fees happen when two people use the same checking account. Be sure to talk about your purchase habits regularly. Communication is the key to accountability, and accountability is what you need.

And don't forget, don't rely on the banks to help you. This is your money, and your financial life. You can do it.

Tips courtesy From my recent Fox News appearance.

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