How to Avoid Overdraft Fees
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We receive many phone calls from customers who have overdrawn their accounts. One common complaint I’ve heard is that customers use a register booklet AND our online services regularly, but still managed to incur overdraft fees. Entering any information manually is never easy. Truth be told, I’ve avoided using a register for years. Unfortunately, as I have gotten older my memory isn’t as sharp as it used to be. It took a lot of trial and error but here are six tips to consider:
1. Use a Calculator
If you don’t own a calculator, or if you’re like me and misplaced it several times, you can use an online calculator instead, like this one.
Most smart phones also have a calculator built in.
2. Record Every Transaction Including Applicable Bank Fees
I like to write down the exact figure to the penny. My husband likes to round the figures in the checking account up so he can have a cushion. For more tips, check out my previous blog here.
3. Record Direct Deposits
If your job offers direct deposit, it will be a time saver for you. Not only will you avoid a trip to the bank, the funds are immediately available in your account once it has been posted. However, be careful not to record your deposit until it’s officially posted into your account.
4. Record Check Deposits
If you receive a paper check, ask a teller about when the funds will become available or consult with your financial institution’s Disclosures. Ours is located at the bottom of our website or click here.
Instead of recording the date that you make the deposit, I find it easier to enter the day of when the check will become available. For example, if I’m a new customer and I deposit my check on May 3, 2012 and was told it’ll become available in five business days then I jot down May 10, 2012 on my register and highlight it in orange.
Generally, most funds will become available to you within one or two business days. Keep in mind that your bank needs this time to get the funds from the issuer’s financial institution, even if the funds are coming from an account from the same institution. A teller can give you an estimated time when the funds will become available. If there is a longer delay, the teller will hand you an extra slip or you will receive a letter in the mail. Check out Kieza Carpenter’s blog for details about deposit holds.
5. Use Register Software Programs
I recommend that you enter your figures manually on a daily basis. When you export six or more months’ worth of transactions into your electronic register, it will cause a world of confusion. For example, we presently show the available balance and current balance in the transaction history section. Available Balance is the amount that is available for withdrawal. Any holds that exist are reflected in this balance in accordance with our funds availability policy. Your Current Balance represents the prior business day’s closing balance adjusted for any transactions received by us but not yet posted.
6. Review Your Accounts Online Daily
It’s a good idea to review your accounts daily to make sure there are no fraudulent charges, and to see what transactions have been posted. If you don’t have your register with you, always deduct any outstanding transactions (i.e., transactions that haven’t posted yet) off your available balance in order to determine what your actual balance is so you don’t overdraw your account.
Overdraft fees are never fun, but you can avoid them if you keep tabs on how much is coming in and going out of your account on a daily basis. Do you use a register booklet or an online version? What tips can you share?
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13 Responses to “How to Avoid Overdraft Fees”
I have my check direct deposited on Wednesday nights at midnight. I checked my account this afternoon and the check that was “considered” overdrawn was showing as cleared. Later this afternoon I received an overdraft notice of $37.00 on the same check. This is the second week in a row that this has happened. Why show a check as cleared and then an hour later consider it overdrawn and charge an overdraft fee?
Hi Mary,
Thanks for reaching out. We’ve sent your comment to be looked into, and will give you a call to discuss.
Thanks,
Dawn
I have direct deposit and still have overdraft fee’s. One was for $37.00 for an automatic withdrawal for an insurance that is done after the 15th of the month, I have no way of knowing exactly when. The other I do not understand was for $32.00 for a transaction that had cleared on Tuesday? Now I do not have enough in my account to cover a check that was made out for $60. & change, at the time I had enough funds before all these bank charges. I am a 70 year old retired person with a fixed income. How does this bank get away with all their charges. I know last year I was sent corospondence regarding that I was involved in a law suit against Webster Bank for their overdraft charges. However they still do it, that really beats all. If a person does not have enough money to cover their transactions, does the bank think they can pay their high overdraft fees, please, use your head people.
Hi Mary. Thank you for reading my blog. I’d like to offer some of my own observation and insight. Even with this modern age, electronic transactions are not instantaneous. When it comes to your direct deposits and electronic withdrawals (processed through your routing and account numbers): there are 3 parties involved: the issuer, an Automated Clearing House (ACH) and the receiver. The ACH acts as a go to system between financial institutions. Generally, the processing time may take up to 3 business days. For example, my husband’s direct deposit (i.e., my play money)takes place every Fridays. Typically, his employer has to process the request as early as Tuesday.
Sometimes your issuer can make a mistake. I remembered years back when my previous employer gave me 2 direct deposits instead of 1. (You can imagine my disappointment when their bank returned it back. :*) Other times a system issue will cause a temporary delay and so forth. Although it is very tempting, we recommend that you avoid making any payments or purchases before your direct deposit arrives. Believe me when I say, I’ve been in your shoes. I used to overdraft my account when I was younger and didn’t understand anything about banking until I started working for Webster back in 2006. I learned a lot of lessons the hard way and hopefully my blog will help you avoid the mistakes I’ve encountered.
I’ve had the same thing happen to me Mary! I’ve had no problems for the 2 or 3 years I’ve been with webster, but they are passing off fees all of a sudden on things that always cleared in “x” amount of time. Time to change banks!
When showing the daily balance, why aren’t the amounts set up for payment deducted so that the balance shows only available funds when checking balances! For example,I entered a payment on the day after a direct deposit would be made and the payment was sent a day earlier creating a overdraft fee.
You see and hear Mr. Smith, the CEO, saying all those “We are large enough to help you and small enough to know you” things businesses love to get across. Then there is “We’ll find the way”.
Well: When I made an oversight error on my Expedia.com ticket purchases, getting our return day one month late, I cancelled the purchase and tried to rebook. But as my credit card was reaching (just by $200) over the limit having to pay all our 4 tix twice, I tried to resort to use my Webster VISA Debit card. But I was a bit short there for that $2100 payment. OK, I thougt: I will go ASAP to my (see the relationship here: “my”) branch ATM at that late night depositing $200 to each of my 2 WB checking accounts. I thought – wrongly – that I will get twice $100 instant credits, transfer $ to my debit card linked account and be able to complete the new Expedia booking transaction (as number of tickets available at that great price was decreasing fast).
But, contrary to all that sweet Webster talk and slogans, even friendly hood-banker image Mr. Smith played to me at one of the functions in his residence, I got only single one credit, just I was unable to use my Webster card.
In the end, Expedia and my other credit card company saved me: Got them on conference call, Expedia confirmed cancellation of my first $2100 transaction so that my credit card company can OK my 2nd $2100 transaction as I was still w/in my card limit.
So, it is sad that after doing business w WB for 10 years and needing the money credited after my ATM deposit, say on Fri after hours, I have to wait till Mon midnight “sweep” to have the amount beyond the meager maximum of $100 (on ALL deposits on ALL accounts) credited.
We got those summer vacation air tix but certainly not to “friendly” talk and “we find the way” WB.
Hi Folks,
Thanks for reaching out to us and letting us know of your frustrations. We will have our Office of the President give you each a call to discuss your personal situations. We highly value your business and hope to win back your confidence in us.
on June 29th, 2012 at 10:17 am #
[...] For some tips on how to avoid over drafting your account, check out Annu’s post here. [...]
I sure wish that when I set up a payment, that the amount was immediately deducted from my available balance. Because my available balance does not reflect how much I “actually” have, I have been hit with overdraft fees in the past. There are times I send out a check that doesn’t clear until weeks later. Can Webster change the way this is done by showing the available balance as not including any payments that have been made/sent out? Thanks.
Hi Michael – Thanks for the comment. Unfortunately, we can’t control when your check is cashed, which is why we recommend using a paper register or its online equivalent to deduct the amount immediately so you always know how much is in your account, regardless of when it clears. One feature we are adding to the site is to show the pending transactions that have been received but haven’t cleared. There will be a link called, “Why are my Balances Different” to help explain how holds work, and will be available this spring.
Thank you,
Dawn
One of our charges for $10.10 came in against a balance of $8.69 – my husband put $40.00 in immediately. Balance came back as $38.68. Not only am I charged $37.00 for this $1.32 overdraft but somewhere you have charged a second $37.00 for what? You tell us to rely on what it says online but when we do you still take money from us and try to give us a line that there were other charges “pending” – NO THERE WEREN’T. If I stole $74.00 from someone I’d rightfully be arrested.
Hi Lori,
Please give our service team a call at 800.995.9995 from 7 am to 10 pm, 7 days a week to discuss. We can explain what’s going on and see if there’s any options to help you avoid these in the future. Also, check out our other blog post on your overdraft options here: http://bit.ly/ODchoice