Simple ways to avoid overdraft fees

Financial hardship is difficult for anyone to deal with, as it can lead to many troublesome situations, such as not being able to pay your bills. Another fallout is costly overdraft fees, but these can potentially be prevented using the following tips:

Say 'no' to overdraft protection
Many financial institutions offer account holders the option to enroll in overdraft protection, which means the bank won't deny a debit or ATM card transaction if it goes beyond your balance. According to Bankrate.com, you shouldn't opt in to this feature. There is no cost if a transaction is declined on your card, which means if you don't have overdraft protection, you'll never incur a overdraft fee. You may think you're doing yourself a favor by opting in for protection, but the truth is that you could be setting yourself up for costly fees should you ever be in trouble financially.

Take advantage of online banking
Online banking is one of the best tools you can use to avoid overdraft fees. Not only are you able to view your balance on a real-time basis from your computer, smartphone or tablet, but you can also sign up for alerts that tell you when your balance is getting low. This information should be enough so that you never get charged an overdraft fee if used properly, especially now that most banks have mobile applications that allow you to access online banking portals, according to Daily Finance.

Keep a checking account cushion
Oftentimes, overdraft fees are the result of small transactions. For this reason, you would be smart to always make sure you checking account has a cushion. This means that you'll have to keep up with your balance regularly, but if you set up alerts that notify you when the balance is low, it shouldn't be a problem. The simplest way to ensure your account always has a cushion is to transfer funds from your savings to you checking account whenever your balance dips below $100. By completing this step, you can reduce the risk of a $20 transaction leading to a $35 or higher overdraft fee.

Set up automatic deposit
Living paycheck-to-paycheck isn't uncommon, and if you are of the people who do this you might be susceptible to overdraft fees. In such a case, it would be wise to set up automatic deposit at your job. This can prevent your account from going into the negative on payday because you didn't have enough money from your previous check to cover that day's essential expenses and bills.

Link to a savings account
One of the easiest ways to avoid overdraft fees is to link your checking account to your savings account. By completing this move, anytime your checking balance goes in the negative, your bank will take money from your savings to cover the difference. However, this may not be free, so it is important to check with your bank before signing up.