Overdraft Charges or overdraft fees are those charges you need to pay to your bank or financial institution for withdrawing more money without having the sufficient amount in your account. Overdraft charges are services fees which your bank charges from you for proving you the amount as credit. And it is seen that everyday many people pays such overdraft charges and returned item services charges for not having enough funds in their account.
You are liable to pay overdraft charges if you do any of these without having enough money in your bank account.
- Withdraw money from a cash machine
- Write a cheque
- Make any electronic payments such as automatic debit bill payment
- Use your debit card facility for purchasing
If you do any of the above mentioned things without having enough money in your bank account, your bank has two options – that is either pay the amount you asked for or return the cheque without making any payment. If your bank pays the amount, without having the necessary amount in your account, then you need to pay overdraft charges the next time you make a deposit. Also, if your bank returns your cheque without paying the amount then also you will be charged a bounced cheque fee.
Nowadays most of the financial institutions allow its customers to overdraw their checking accounts by paying a nominal overdraft charges. This helps the financial institutions to skirt credit laws and gather billions of dollars as overdraft charges. According to these financial institutions these types of facilities which allows the customers to overdraw their accounts with ATM and debit cards, are offered as a service to their customers. But many people as well as financial experts say that these facilities even though useful in many occasions are not a good deal for customers and also have to pay high interest for such credit schemes. Also many financial institutions consider overdraft charges are one of the main sources of profit.
It is highly recommended to cover the overdraft amount as early as possible by depositing the desired money into your account. This is because whenever you make an overdraft you need to pay some overdraft charges. And when you are getting late for the repayment you will be charged with an additional fees or any daily charges. So to avoid such charges it is a better idea to pay the overdraft amount at the earliest. This helps you to save money for any late fees and any other additional overdrafts.
If you can manage your bank account carefully you can easily avoid bank overdraft and overdraft charges. After all, most overdrafts are caused by our carelessness in managing our bank accounts properly. Keeping a close eye on your bank balance and updating your bank account register will help you to know how much money is available for you in your account. By managing your bank account and money in a systematic way you can say goodbye to overdraft charges.