Whether it is a late fee or an overdraft fee, no one likes to give away their money for something that could have been prevented.
If you are saving for a home a mortgage calculator will give you a good idea of what you need to save for a down payment as well as what your monthly payments will be. You don’t want to let fees get in the way of the home buying process. Here are a few tips to keep your checking account up to date and avoid overdraft fees.
Keeping your checking account balanced is always helpful. If you always know what you have in the bank, you will be less likely to overspend.
Whether you use your debit card or write out a check, keep track of each purchase. Even when you check online for a balance, it doesn’t always reflect the purchases made for the day and it never accounts for the checks until they are cashed.
By keeping a steady log you will always know, down to the penny, how much money you have in the bank. Keep that mortgage calculator in the back of your mind and the goal of owning a home to keep you disciplined.
The ledger that comes with a new box of checks isn’t always user friendly. You may want to come up with your own using a computer spreadsheet.
You can print out the pages and keep track by hand or you can enter the amounts into the computer at the end of the day. Either way, you have a usable record of the money going out and the money going in.
You can also keep a set amount of money in the checking account for emergencies. Some people keep anywhere from $100-$500 in their accounts at all times.
When you do go over, you are just cutting into your own money and can repay the amount when you get paid again. Your goal is to never have to use this “safety net,” but if you do, it is just your own money that you are borrowing and there is no fee associated with it.
If you’ve looked at a mortgage calculator recently, you have probably been thinking about saving more in the upcoming weeks and months.
There is another option with the same idea of using your own money as a backup, this one just has a little different spin. Some banks will let you attach your savings account to your checking account.
When you go over, instead of charging you an overdraft fee, the money is withdrawn from your savings account and added to the checking account instantly. It isn’t something that you need to do, the computers take care of it the minute you run out of funds.
Many banks will let clients set up low-balance alerts. You can get an email, a text message, or even a phone call when your checking account falls below a certain number. This will at least give you the heads up that you may be headed into overdraft fee territory, so either stop spending or add more money to the account.
Finally, overdraft protection is another way to avoid the overdraft fees piling up. With overdraft protection, a bank gives you, in a sense, a line of credit.
If you overspend from your checking account, they will remove money from the line of credit. It will be your responsibility to pay the money back. In this situation you aren’t paying the traditional overdraft fee, but you are still going to pay a small fee.
In most cases it is less than half of a normal overdraft fee. If you have tried everything, you can always use this method to cover your overspending. Use a mortgage calculator to keep your eyes on the goal and avoid pickup up overdraft fees.