Staying Ahead of Overdraft Fees

Seeing a negative account balance can be frustrating—and expensive. Overdraft fees are common, but they’re also avoidable. Knowing how they happen and what controls you have puts you back in charge of your money.

Why Accounts Go Negative

An overdraft occurs when a payment is processed for more than the money available in your account. In that moment, the bank temporarily covers the difference and charges a fee. This can happen through everyday debit card purchases, online bill payments, ATM withdrawals (if overdraft services are enabled), or checks that clear when funds are low.

Timing Matters More Than You Think

Many overdrafts happen because transactions don’t post in real time. Banks process deposits and withdrawals in a specific order at the end of the day. If a large payment clears before a deposit you made earlier, your balance may dip below zero—even if you believed the money was there.

Simple Ways to Reduce Overdraft Risk

The easiest way to avoid fees is to stay aware of both your balance and your bank’s rules. Using low-balance alerts, reviewing statements regularly, and keeping track of automatic payments can prevent surprises. Linking your checking account to savings or a credit line can also provide a backup if funds run short, often for a smaller fee.

Another effective option is choosing not to enable overdraft coverage for debit card and ATM transactions. When overdraft is turned off, purchases are declined if funds aren’t available—saving you from fees altogether.

Understanding Your Overdraft Choice

Overdraft coverage for one-time debit and ATM transactions is optional. If you opt in, transactions may go through but fees apply. If you opt out, the transaction is declined and no fee is charged. Recurring bills and checks may still process either way, depending on your bank’s policies.

Key Takeaways

Avoiding overdrafts is about awareness and control. Knowing how transactions post, using alerts, and choosing the right account settings can significantly reduce fees. A few small adjustments can keep your balance—and your budget—on track.

What to Do Next

Take a moment to review your overdraft settings in your banking app, enable balance alerts, and check your available funds before large purchases. These quick steps can help you avoid unnecessary fees moving forward.