- Is there an interest rate or flat fee for overdrafts? Depending on the frequency vs. amount of overdrafts that you experience, one method can be better than the other.
- Can I link my checking account to a source of funds that will be used before the overdraft feature? If you can attach a credit card or (better yet) a savings account to pull from, you may avoid fees.
- Would an overdraft line of credit be more advantageous for me? Ask your banker what options are available to you. Find out exactly how each process works and figure out the consequences of each choice.
The best way to minimize overdraft protection costs is to prevent overdrafts. Aside from basic financial planning, you can keep tabs on your accounts by using the web and other technology to make sure you have the funds.
I find that people in a cash-crunch can save themselves some energy and money if they’re proactive. If you know that you’re low on cash (because you balance your budget and check your accounts online), then see if you can get a few extra days. You can call the party that you owe a check to and ask if they will wait a few days for your payment.
You can minimize problems if you keep tabs on your account:
The direct, honest approach is better on your finances than writing bad checks.