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By Patrick Russo, DepositAccounts.com
Checking account overdrafts are annoying because the fees that come with them add insult to injury – not only are you out of money, but you’re then forced to pay to use someone else’s (i.e., your bank covers you). Not only that, but you could mess up your credit by not bringing an overdrawn account back into the black within a certain amount of time.
You could choose to forgo your bank or credit union’s (sometimes costly) bailouts by opting out of overdraft coverage, but then you run the risk of having a check bounce or debit card declined for a crucial transaction. An easier option is to simply avoid overdrafts altogether.
In order to help you do that, companies and financial institutions like Alliant Credit Union have developed personal financial management tools to keep you on top of your expenses and account balance. Below are several services that you should look for, at a minimum, in one of these tools to help you avert the hassle of an overdraft.
Any financial management tool should help you keep track of, or categorize, your expenses. Alliant Credit Union’s Personal Financial Management system allows you to track both fixed expenses like recurring utility bills and and variable expenses like one-time entertainment purchases. It is helpful to see in one place where all of your money is going and decide where you need to cut back or what you can afford to give up in the way of monthly expenditures.
Being notified when your account balance falls to a certain point could serve as an impersonal warning to curb your spending habits until you are out of the overdraft danger zone. Any solid money management tool will allow you to set alerts that will notify you automatically. Setting alerts for bill reminders is also doable and will serve as a helpful backup in case you forget.
Setting financial goals can also help deter you from overdrawing your checking account by shifting your mentality from thinking about how much you have available to spend at any given time to how much you could save in a given period of time. If you are trying to buy a house or pay for a child’s college education one day, you will be less likely to spend money on unnecessary things. A good money management tool will allow you to set savings targets so that you can see your progress and be encouraged to keep going.
By utilizing a personal financial management system with the above capabilities, you will not only be able to see an overdraft before it happens and dodge it, but you will also be able to build on the money you will save from avoiding any associated fees.
Patrick Russo writes for DepositAccounts.com, a site that features credit union and bank reviews, rates, and deals for over 7,500 federally insured institutions.