I recently spoke with a friend that told me he had been paying a $25 fee every time he wrote a check that bounced! To all my readers out there - oh please . . . I beg you . . . don’t pay money for something as silly as a bounced check (also known as insufficient funds - it happens with debit cards too)!
If you have the habit of running your checking account into the negative - don’t worry about it! A great way to save money is to talk to your bank or credit union and set up an overdraft protection. Warning - Most banks will rip you off in the process (just being honest). Most credit unions will have two types of overdraft protection services available:
1) Overdraft Protection tied to another account. At my credit union, my checking account is tied to my savings account, which is tied to my money market savings account. So, if my spending gets out of control on accident - and I run out of money in my checking account, they pull from my savings instead. If my savings is empty - they pull from my money market savings. The best part? No Fees! Absolutely free!
2) Overdraft Protection Line of Credit. This works the same way as being tied to another account - but can be helpful if you don’t have another account with money in it. Careful - this operates like a loan and usually has interest rates that are very, very high. If used as an emergency backup and nothing more - an overdraft line of protection can come in handy. By the way - this line of credit is a great way to build and improve your credit score - even if you never use it!
My last word - A well-thought budget and regular planning with your spouse, family, or self is the best route to avoid overdraft problems all together!
