$35 Billion In Overdraft Fees

How To Avoid Overdraft Fees From Financial Institutions 

By: Brian Ruiz

One of the main problems many Americans face every year is overdraft fees from financial institutions. The overdraft charges are around $35 dollars every time your checking account hits $0. Financial institutions enrolled you in this kind of protection to ensure that if you don’t have enough money to cover for a purchase they would step in and pay the remaining balance in exchange for a hefty fee. An article written by Forbes wrote that in 2018 Americans paid more than $33 billion dollars just in overdraft fees. Ouch!!. This has been the most the country has paid since 2009. This is something you must avoid to get ahead in your finances. But how can you avoid it ? Well there are many ways you can eliminate paying those high overdraft fees. 

1. Control Your Spending

When it comes to controlling our spending it can be kind of difficult, but it can be more challenging if you can’t set aside your needs vs. your wants. We are always looking for ways to spend money even when we really don’t need too. Online shopping has made it more convenient for people to not leave the comfort of there own home with just one click away. We get caught up looking for the things that we need but end up buying things that we want. 

One of the things you can do to have control of your spending is by creating a budget. They’re many ways you can create a fun budget and not feel like you are being restricted from doing fun things. That’s not what budgets are for. If you want to improve on your finances then budgeting is one of the tools that would help you improve your finances and build a strong foundation of wealth. It puts you in charge and in control of every dollar you eat and spend. There are many ways to budget, first find the one that you believe fit you and stick to it. All will depend how bad you want to change your financial outcome.

2. Pay Everything With Your Credit Card 

Many people would argued that paying everything with credit card is not a good way to keep yourself out of debt. Or paying with credit cards can lead you to over spend and find yourself with debt. But what if I tell you that by using your credit card to make every purchase and also paying some of your expenses can help you save you money. Many phone service providers like T-mobile, Verizon, or AT&T gives you an incentive to sign up for autopay on your bill. The incentive can be up to $5 for each line you have. So imagine you have 4 lines and your bill is $320 by having autopay you would only have to pay $300 saving $20 that can be used to pay for another expense. Wait but that’s not all! Credit card companies have point systems in which you can take advantage of by paying everything with your credit card. 

Many credit cards offer  1% to 4% cash back in things you regularly have to pay for. Basically your getting a portion back of the money you have spent. This allows you to use the cash back to pay for a portion of your credit card balance and save or invest the portion saved. For example, if your billing cycle for that month is $1,000 and you have 200 dollars worth of cash back money instead of you making the payment of $1000 you will use the 200 dollars cash back and the remaining will be $800 which in theory you will be saving 200 dollars that you can either save or invest. But remember for this to work and not have to pay any interest you have to insure that you pay your last statement balance not your current balance. I have been using this system for quite a while and I have been able to save a good amount of money each year. This allow you to get rid of those expensive overdraft fees and never make a late payment on your bills. Remember the goal here is to keep your expenses low and increase your income.

3. Opt Out From The Overdraft Protection 

Getting out from financial institutions protection overdraft can be one of the ways to avoid paying those high fees. Call your bank and tell them you want to get out of there overdraft protection. You are better off getting your card declined then paying for those fees. Did you know that if you were get to get charged an overdraft fee of $35 for being short $25 and it would take you three days to pay back that amount. It’s the same as taking out a loan with a annual percentage rate of 17,000%. Ouchhhh!!!

Bottom line is just make sure you avoid overdraft fees. I know you can sometimes find yourself stressing whether over if your saving enough or paying down debt leaving you with nothing to pay all your bills. If that’s the case it would be great for you to create a budget and take advantage of credit cards. 


Always make sense of your finances🧠

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