The cost of living continues to rise while the average median income continues to remain the same. With that being said making every dollar count is essential to help ride out this bad wave in the economy. Overdraft and bounced-check fees are nothing new to the world of banking. It’s no secret that banks and credit unions alike generate fee income from such charges. Anytime a commercial bank reports a growth in net income they will usually site increased fee income as a result of the growth. With these fees generating billions of dollars a year in income for financial institutions the likelihood of these fees continuing to rise is significantly high.
There are many ways that consumers can protect themselves from these types of fees. One of the easiest ways is to keep a register to track your spending. It may be old fashioned, but just watch how much you will save just by using this classic tool.
Most people would consider writing checks to be a thing of the past. I would not recommend throwing them out simply because you never know when you are going to need one. Debit cards a great tool, however they are not immune to overdraft fees and often times are more likely to cause these fees than checks. I would not recommend cash to pay for items simply because if you lose it its gone forever. Keep it in your bank or credit union where it is safe.
If you do not have a debit card I would recommend considering one. They are excepted almost everywhere Visa or MasterCard is accepted. Debit cards can be used for pin based transactions or what is known as signature based transactions. Pin based transactions come out right away. Signature based transactions are similar to writing a check as they can take up to three days to be debited from your account. This is where most people run into trouble. When your card is swiped and you sign for it. The funds are not placed on hold in your account or debited from your available balance making it seem as though you have more money than you really do. If you don’t keep a register on your account it is easy to forget about these transactions which can cause hundreds of dollars in fees to be charged to your account.
The most effective way to avoid these fees is to keep track of your spending. A transaction register is a powerful tool. If that’s to “stone age” for you most smart phones have applications that allow you to track your spending electronically.
One missed item in your ledger can cause a chain reaction that sets off a barrage of fees. I would recommend stashing some funds away into your savings account for overdraft protection. Most financial institutions will automatically link your savings account to your checking account for overdraft protection. There is often a fee charged for this service and amounts will vary by financial institution.