Nobody likes to pay overdraft fees. I know I sure don’t. Just when you think you have your finances under control there are some charges added to your bank statement that you were not prepared to pay. Those fees can be huge.

The fact is that if you are consistently being charged with overdraft fees, you have probably not been keeping track of your check writing and are paying whopping fees to make it right. The question is how to avoid overdraft fees.

Here is a list of activities that you can engage in to prevent future overdraft fees.

1.      The number one step that you can take to prevent overdraft fees is to keep track of all checks that you write. Make sure that you enter each transaction into your register as soon as you write them and subtract immediately to get a balance to work with.  Don’t forget about the monthly service charges, they should be subtracted as well.
2.      Make sure that you also record ATM transactions and any fees there. Just because you did not write a check is no reason not to place these transactions in your register. Even if you use duplicate checks, you should still keep your records up to date so that you know what you have to spend.
3.      Write out a budget and stick to it. Knowing what you have to spend and only spending that amount will help you to avoid unplanned for expenditures that can get you into trouble.
4.      If you have automatic payments coming out of your checking account each month, don’t forget to enter them and subtract those amounts at the beginning of the month so that you will not forget about them. If your budget is tight and those payments are scheduled to coincide with weekly or bi-weekly paychecks record the payments when you make your deposits. You may want to work those payments into your register by skipping ahead a bit so that you will not forget.
5.      You should always review your statement each month and reconcile it with your register by subtracting any outstanding checks or fees that are not shown.
6.      Check with your bank to see if you can add an overdraft line of credit to your account to prevent the large overdraft fees. The cost of doing this is about $15 annually plus 12% apr when it is used. The cool thing here is that if you never need to use it the interest is never charged.
7.      Create a cushion amount that you will never allow your account to go below. Promising yourself that you will not write a check if your account balance is at or below say $20 or $30 can help you avoid those extra charges.
8.      Check with your bank to see if you could link your savings account to your checking account allowing them to transfer between accounts for those occasional lapses to prevent those overdraft fees. Fees for this service are usually less than you would pay for an overdraft. Just don’t take advantage of it too often or your savings will dwindle to nothing.
9. Another tactic to use that many are unaware of is to get to know your banker. If used properly, this technique can be effective. By getting to know the person in charge of your account, they may be willing to occasionally forgo the overdraft charges if you let them know quickly that you may be overdrawn. Of course, timing is the key and still requires that you keep track of your balance.

By applying consistently any or all of these techniques you should be able to avoid overdraft fees and save yourself a bundle of money.