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If you read any of the recent news about how well people are managing their bank accounts, you would think that it is nearly impossible to avoid overdrafting your bank account and paying hefty fees to your banking institution.  Experts estimate that 1 in 4 checking accounts are overdrawn at least once within the course of a year, so 25% of bank customers are paying the billions in fees associated with overdrafted bank accounts taken in by the banks each year.  Following these tips for avoiding overdrafts will keep you out of that 25% of banking customers paying overdraft charges.

Track Your Money

The easiest way to avoid overdraft charges from your bank is to track all of your deposits and withdrawals for the bank account.  This give you an accurate picture of your financial health at all times and will reduce the chances that you will spend more money than what the bank is showing available in your bank account.  Taking the time to perform this step every time money enters or leaves your bank account will save you hundreds of dollars in overdraft fees.

Pad Your Account

Another way to avoid overdrafts is to pad your bank account by $100 that is not reflected in your checkbook register.  This provides a cushion against overdrafts in the event you neglect to write down a small purchase in your checkbook or an unexpected fee reduces the balance of your bank account.  This can also be used as a savings method, with certain deposits into the bank account not written in the register to prevent the spending of the money.

Link Your Accounts

If you have a savings account or a line of credit with the bank that holds your checking account, you may want to consider linking your accounts together to reduce the cost of overdrafts.  In these cases, the banks charge a smaller fee, typically around $10, to transfer the amount needed to cover the shortfall in the checking account from one of the other accounts.  Of course, this method only works if there is enough money in the other account to bring the checking account balance out of the negative numbers.

Use The Alerts

Many banking institutions now have programs in place where their account holders can sign up online for email or text message alerts when the balance of the bank account is low.  Most of these programs allow the account holder to choose the balance amount that triggers the issuing of the alert so account holders that have large amounts of money regularly going into and out of the bank account can choose a higher balance alert limit to prevent overdrafts.