6 Tips to Avoid Overdraft Fees

Exceeding the balance in your checking account when making a transaction may cause overdraft (sometimes referred to as Courtesy Pay) fees. These fees will add up if your account remains overdrawn and you continue to make purchases, so it is best to avoid making these transactions altogether. Here are six tips to help you avoid these expensive fees.

1. Understand your Available Balance vs. your Balance

When you monitor your balance in Texell’s Digital Banking or your account at another bank, make sure you are paying attention to your available balance. Your available balance is the amount that you have available without incurring an overdraft fee and includes pending debit card purchases. If your available balance is less than $0, your account will be overdrawn, causing fees.

Here are a few examples:

If you have a balance of $50 and use your debit card to purchase lunch for $20, there is a “hold” on your account for the $20 purchase. Your balance would be $50, but your available balance would be $30 to hold the $20 purchase until the restaurant submits its transaction for payment.

If your available balance is $20 and use your debit card to purchase lunch for $20 and leave a $5 tip, your available balance will be $0 but you could still incur an overdraft fee with the restaurant submits the final $25 transaction for payment since it exceeds your $20 available balance.

2. Set up account alerts and card controls

Frequently monitoring your checking account is the best way to prevent overdraft charges, and there are several ways to automate this in your account. Texell’s Digital Banking allows you to set up account alerts for low balances and large withdrawals. You can also set up card controls with daily limits to prevent overdraft purchases. Card controls also allow you to report a card as lost or stolen, freeze it if you suspect fraudulent activity, and update your pin. If you freeze a card, it must be unfrozen to be used again.

3. Set a budget

Take charge of your money moves by setting your budget—and sticking to it. A zero-based budget is the best practice, as every expected dollar of income has a plan before the month ends. Whether it’s meant for rent, utilities, bills, paying down debt, or increasing your savings, you can make sure you’re maximizing your income and regulating spending with a carefully planned budget. To learn more and get started, read our article, Building a Basic Budget.

4. Opt out of overdraft coverage or Courtesy Pay

You can decide if your checking account has overdraft coverage or not. If you opt out of overdraft coverage, your bank, or credit union will decline a debit card or ATM transaction if there isn’t enough money in your account. Your bank or credit union may still cover checks and recurring debit transactions, even if you have opted out.

5. Link your checking account to your savings account or a credit card.

By linking your savings account or credit card to your checking account, your bank or credit union will automatically transfer funds to your checking account to avoid overdraft fees—as long as there is enough money in your linked account to cover the transaction. While a fee may still apply, they are less expensive than non-sufficient funds (NSF) and Courtesy Pay fees.

6. Schedule payments wisely

While scheduling automatic payments helps you avoid late fees, if you forget a due date, be aware of when they post. Set calendar reminders or alerts in an app if needed to keep track of upcoming debits. If you are struggling with too many large payments at once, reach out to the company and request a change in the due date to one that is more manageable.

Contact Texell for questions about account activity

To avoid overdraft, Courtesy Pay, and NSF fees, monitor your account often in Digital Banking. If you suspect a possibly fraudulent transaction, contact Texell’s Member Services by sending a secure message in Digital Banking or call or text 254.773.1604. To learn more about money management skills, read more articles on our blog.

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