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Consumer Watch: Steer clear of the overdraft monster

Several tactics can help consumers avoid being charged costly overdraft or non-sufficient funds fees (KOKH).  

There is a panicky feeling that happens as soon as you realize you've overdrafted on your bank account. Many banks do offer overdraft protections, but that doesn't mean you’re totally safe. Overdrafting on your account is costly. Fees go as high as 30 dollars for every attempted charge. According to the Consumer Financial Protection Bureau, these fees are a source of revenue for many banks.

3.87 trillion dollars-- That's what banks collected in overdraft or non-sufficient funds fees in 2015.

There are four recommendations from the Consumer Financial Protection Bureau to keep you from overdrafting, keeping your money in your hands,

Do no opt in for overdraft coverage credit. If the bank doesn't provide credit coverage, they may not charge you a fee. This means if the account has no money your payment will not go through. If you opt in for overdraft protection many banks will then charge you those costly fees associated with covering the charges you had no money to pay.

Link your main checking account to a reliable savings account. You'll avoid a declined charge and overdraft or NSF fees. If you do this, your bank may still charge you a fee for moving the money between linked accounts for you, but the CFPB says those fees are usually low.

Sign-up for low balance alerts on your phone. Your bank will text or email you if funds get below a certain amount. This will alert you to add money to that account, or to stop spending until you can replenish the balance on the account.

If you are just bad a keeping track, you could opt to mainly use a pre-paid bank card from your bank. They work like a regular debit or credit card, but will not allow overdrafted transaction. These can be especially beneficial for younger consumers whose parents are trying to better control their children’s spending habits.

Even ask your banker not to authorize overdrafted charges on your account, you could still face fees. Recurring subscription charges often happen overnight, and a bank may authorize them even if there are not enough funds in your account-- those costly fees would then start hitting your account the following morning.

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