It’s a common story: an Average Joe ends up paying forty bucks for a “value” meal at his favorite gut-bomb chain. Curse you super sizing!!
We’re not talking about the Time Value of Money and the cost of Big Macs 30 years from now. We’re talking about overdraft fees. Most of us have fallen for it, and maybe you have too. That medium fry just isn’t enough sometimes. You might be an Average Joe, or Bob, or Toucan Sam — it really doesn’t matter. All you can say is… crap. You get a $5 burger but wind up paying $40 because you got a $35 overdraft fee included with the meal. This is becoming a common place budgeting issue ever since those sweet pieces of plastic called Debit Cards came on the scene.
It does not necessarily have to be Debit Cards; but checks or even ATM withdrawals that cause that minus sign to appear next to some God-awful amounts. So, how do you avoid these punitive fees?
Why Do Overdraft Fees Occur?
Banks like to make money, which should come as no surprise considering this is America and the first rule of capitalism says “make money or die.” Banks are businesses – not charities – and like any business out there, they like hearing that cha-ching. Banks have computers and computers don’t have feelings. They are set up to automatically charge you for borrowing money, which is essentially what you are doing when you spend what you don’t have. They didn’t know you’re coming in tomorrow to make a deposit and they certainly didn’t know you had car trouble, food poisoning, or forgot that you ordered that great new kitchen knife that never needs sharpening… ever. At $30-$40 a pop, overdraft charges can get pricey and get you in the hole fast.
How to Avoid Overdraft Fees
As most of us know, day-to-day financial matters can be grueling and tough to keep track of. So here are some simple solutions to cut down on those costly mistakes – and maybe even maybe get you some money back.
- Use online banking. This is an easy and quick way to reconcile your banking statements and remind you just how poor you really are. The great thing is that it is a free service at most financial institutions. If you are even the slightest bit computer literate, take advantage of online banking and use it.
- Keep a check register. Yes, this is “old school” banking, but it is the only foolproof way of keeping tabs on what you spent. It also shows that you are trying to be responsible and helps the sympathy vote from bankers, if the need should arise.
- Don’t depend on ATM bank balances. It can take up to five business days for transactions to hit your account. And guess what? They usually show up right after that rent check you wrote back when you thought you had all that money.
- Ask about overdraft protection. This might be offered as a credit product, which allows you to have a small line of credit, attached to your account. Some banks allow you to link a Savings account to your checking just in case of such mishaps.
- Don’t get upset at the bank. Sure, they took $120 for 4 small transactions, but remember: the banker is not up every night cackling with evil laughter. They want good accounts because it means they aren’t at risk of losing money. Getting mad at them won’t help your case.
Finally, if you do happen to pay $40 for that Big Mac, don’t be afraid to visit your financial institution. Often, if you have been a customer for a number of years and rarely have this happen, your bank might work with you to reduce your fees. It certainly can’t hurt as much as paying Prime Rib prices for a burger and fries that you shouldn’t be eating anyway.
Posted by logan in Banking, Finance, Manage Your $