By Jennifer Tucker

February 7, 2023 | 5 Min. Read

Sometimes, despite your best efforts (or intentions!) to stick to a budget, you might find your checking account a little short. Maybe you ran into an unexpected expense or lost track of a payment due date. Or maybe you spent a little more than planned for a special occasion. We get it because it happens to all of us.

But what do you do when your expenses exceed your budget, and you incur an overdraft fee? How can you prevent overdrafts from happening too often? And how do you find the best checking account to meet your needs?

Here, we’ll cover what you need to know about overdraft fees and overdraft protection services and offer some tips for reducing and preventing overdraft fees in the future.

An overdraft fee occurs when you make a purchase that exceeds the balance in your checking account. When you don’t have enough money in your account to cover the transaction, your bank or credit union covers the shortage so the transaction can be completed. You’re then charged a fee for that service.

The cost of an overdraft fee varies by bank, but the average overdraft fee is around $30 per transaction. These fees can add up fast and sometimes create costly consequences. That’s why it’s so important to keep a close eye on your account and carefully manage your budget.

Many banks and credit unions offer options to help if you overdraw your account, like enrolling in overdraft protection. Overdraft protection is a service that allows the bank to make an automatic transfer from another account—like your savings account—if your checking balance becomes negative. While it’s still important to monitor your account daily, overdraft protection can help you manage fees and keep your account in good standing.

How do you know if you should enroll in overdraft protection? There are a few reasons why you may want to consider this service:

Overdraft protection can be a helpful service to have just in case you ever need to spend more than the balance in your account. However, it’s important to remember that it comes with a cost and—just like other banking fees—overdraft fees can add up quickly.

We all know how hard it can be to manage our budgets. If you want to make sure overdraft fees don’t get out of control, it pays to know how to prevent and manage them.

With all the digital tools we have now, the days of balancing your checkbook may be long gone. But that doesn’t mean you shouldn’t track your account balance, transactions, and payments. Keeping an eye on your account and always knowing your balance can help you avoid overdraft fees.

When you use direct deposit, your paycheck lands in your account no matter where you are—no trip to the bank required! This makes getting paid quicker and easier, and having immediate access to your funds can help prevent overdrafts.

For added insurance, keep a little extra money in your checking account. Decide on a certain amount that will always be in your account and make a commitment not to dip into it. When you look at your account balance, automatically subtract that amount and budget to that figure.

When you choose to enroll in overdraft protection, your checking account will be linked to another account, like your savings. If you overdraw your checking, funds will be drawn from the other account to cover the transaction. The fee you incur for overdraft protection may cost less than non-sufficient funds or late payment fees.

When you open a Marine Credit Union Checking Account, you open new possibilities. We can help you reach your financial goals, even if you’ve been turned down elsewhere.

Federally insured by NCUA