Overdraft fees are a controversial subject. Some people think they’re unfair, while others see them as an acceptable way to ensure they don’t bounce checks or overdraw their accounts. If you’re in the latter camp, this article will explain why banks charge these fees and how they work–and if you’re not happy with them, the article suggests some ways to avoid them. So, scroll down to learn more about overdraft fees and bank accounts with no overdraft fees.
Debit cards don’t work like credit cards.
Unlike credit card transactions that carry no spending limit, debit cards only allow you to spend what is in your bank account or savings account. However, some debit card features allow users greater freedom in managing their finances than traditional checks or cash would afford them: electronic payments and automatic overdraft protection (which allows users to overdraw their balances for small amounts).
Your bank decides how to handle a decline.
Your bank decides whether to decline the transaction or let it go through. If the purchase is declined, you may have an overdraft fee if there isn’t enough money in your account to cover the purchase. If there is enough money in your account, but your bank allows the transaction to go through anyway, you could be charged both a fee for insufficient funds and an overdraft fee.
If you want to avoid either of these scenarios, ensure you always have enough money in your account before purchasing to avoid unnecessary fees!
There’s no grace period for overdrafts.
You may have noticed a new fee being added to your banking statement. It’s called an overdraft fee, and it can really add up if you don’t watch out for it. So if you’re like most people, you probably thought that banks would never charge fees for simple things like depositing checks or using ATMs. Well, think again!
Overdraft fees are charged when your account doesn’t have enough money to cover an item placed on your debit card. While some banks offer overdraft protection plans that allow you to pay off these fees with interest (but not all), most accounts require fees from $10 at the low end up to $38 per transaction as of September 28th, 2016.
Many banks offer the option of declining transactions that would create an overdraft.
If you get in the habit of declining transactions that cause an overdraft, you may be able to prevent future overdrafts. You can also use this strategy if your bank offers a line of credit and offers the option to decline debit card transactions when they would result in an overdraft.
If your bank provides this service, here’s how it works: You can tell the merchant at checkout that you want only to accept charges on your card after 11 p.m., which is when the daily posting of transactions occurs. This way, if someone tries to charge something else on your account before 11 p.m., and their purchase will put you over $0 (and therefore trigger an overdraft), then it won’t go through since there’s no money available for them to take out!
“To activate no-fee Overdraft Coverage, set up direct deposit with SoFi Checking and Savings.”
Your bank account is a great tool to help you manage your money and stay on top of your finances. However, it’s important to understand the fees associated with using your debit card to avoid overpaying for services or incurring unexpected charges.
