How Can I Prevent Myself From Overdrawing My Account?

A reader writes in to tell us about her banking experience:

This isn’t really WWYD, but a “What I Did Do.” I thought I would send this in as it might help other people when faced with a similar situation.

I forgot about an automatic payment which wiped out my checking account two days before my paycheck came in, and in that void I swiped my debit card five times which resulted in five overdraft fees of $35 each. Of course I had plenty of money in my savings account, but since I don’t sign into my bank account every day (should I be doing this?), I didn’t realize in time to transfer the money.

After angry-crying at the bank and those around me to cover up that I was actually extremely angry at myself, I called the bank and (very calmly) asked that they waive the fees. I have been a customer for over seven years and have never over-drafted before. They waived two of the fees, bringing the penalty down to $105. I got back $70.

I also asked if I could start receiving alerts when this happens—of course I check my email constantly and if I saw I had one overdraft, then I could easily go and transfer the money. The customer service rep said they did not offer this, but gave me two options: 1) I can sign up for Overdraft Protection, which will automatically transfer money from my savings into my checking account to cover the expense, for a $12 fee each time this occurs. 2) I can set my debit card to decline at the register in the event of insufficient funds.

I opted for option 1 in the event that I’m stranded somewhere and need money. I think the key here is speaking calmly and politely to the representative on the phone. Recognize that you are the one who made a mistake, and you need their help. I have worked at a call center before and you can bet your bottom dollar that if you were rude to me I was much less likely to go that extra mile to help you.

What would you do to avoid this situation in the future (besides just like being responsible about projecting your expenses)? Any apps that could help here? — N.

•••

N., thanks for taking the time to write in and tell us about your experience!

I check my bank account balance on a daily basis, but this habit is mostly due to the fact that someone once duplicated my debit card using a skimming device and withdrew everything I had in my bank account, and I’m paranoid that it might happen again.

I currently bank through Chase, which has allowed me to set up several email notifications: When a deposit clears my account, when a withdrawal over $100 is made, when my balance hits under $500—among other alerts. I set all of this up via my account online, so I’d double check to see if this option is available to you (I know Bank of America offers low-balance text message or email alerts too, as does Citi and many credit unions). Because of this, I’ve been fortunate enough to avoid over-drafting. If this isn’t unavailable, I think overdraft protection is a fine alternative.

You don’t need an app if you’re taking a few minutes to check your balance on a daily basis. Being highly aware of my balances has also helped me keep my spending in check. When I’m out and facing the question of “can I afford this?,” having my balance fresh in my mind makes it easier to answer yes or no.

 

Photo: ryan

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56 Comments / Post A Comment

grobel (#3,631)

Let’s do a survey for how often people check their bank accounts! I check mine multiple times every day because I am insane. My boyfriend told me he NEVER checks his (he is also insane). The only time I don’t look at it regularly is if I’m on vacation because I’m scared to log in to my bank website on random WiFi networks.

shannowhamo (#845)

@grobel I check it at least once a day but not usually more unless there’s a specific reason. My husband used to check his randomly (but not enough because he was always overdrafting) but now I’m in charge of our money and things are much better (not that I don’t mess up on occasion myself.)

allreb (#502)

@grobel I probably check once a week or so, more if I’m waiting for a check to clear (my landlord takes FOREVER to deposit my rent). I also check more if I feel like I’m spending a lot that month, just to make sure I’m not in danger and see if I need to slow my roll a bit.

readyornot (#816)

@grobel I check on mint every day, and it seems pretty redundant, honestly! The weird things which have happened when I could have used the extra logging in were when I was on vacation, trying to bliss out away from it all.

jennonthego (#5,366)

@grobel I probably check mine every other day. Sometimes it’s easier for me to check my account online than get up and walk across the room to get the receipts out of my wallet to enter in my Quicken.

Plus, I live on the razor’s edge most of the time, so I’m always checking to make sure I haven’t forgotten to enter a charge and I’ll be on the verge of overdrawing.

@grobel If I’m waiting for something to go through, multiple times. Insanely multiple times. Otherwise, once a day on weekdays, not usually on the weekend.

limenotapple (#1,748)

@grobel I check once a day. I like looking at my money before it goes away.

samburger (#5,489)

@grobel I check every other day or so. I never ever check to see how much is in there because I always know (thanks, YNAB!), but I check to do a rec (yes I rec every two days) and to check for fraudulent charges.

sherlock (#3,599)

@grobel My habits on this changed so much when my financial situation changed this summer. Before, I was operating on a pretty tight budget, so I easily checked it daily. Now I have a lot more flex room in my budget, and I don’t check it nearly as often as I would like – maybe once every week or two?

It was really interesting to me when I first noticed this shift, because my personality definitely skews towards ‘check it everyday’ territory.

loren smith (#2,300)

@grobel I check my bank account and credit card every day, making sure that everything lines up to what I remember. I pay my credit card off everyday, because mastercard is never getting a dime from me.

ifwecantaloupe (#2,654)

@grobel I used to check it every day when I worked at a desk job and liked to procrastinate, but I don’t really check it more than once or twice a week at this point. I only use credit cards or cash because I’m paranoid about my debit card number being stolen and I only get paid once a month, so the amount in my debit account is pretty consistent except when I pay all my bills on payday.

muush (#521)

@grobel I check my bank accounts several times a week, some days not at all and some days multiple times.

Goodie (#5,447)

@grobel A few times a week, depends on if I have had a chance to spend any though. All my direct debts are scheduled to come out the day after I get paid (I get paid monthly) and if I have been at work and not been to the shops I dont check as much.

Cup of T (#2,533)

@grobel I’m embarrassed to say I maybe check monthly. Clearly I need to get better about this… Thanks for the peer pressure, guys!

lisaf (#3,089)

@grobel I only check it a few times a month, but mostly near the end of the month to make sure I’m on track (I get paid on the first of every month, so I know there’s plenty in there during the first few weeks)

WayDownSouth (#3,431)

@grobel I check my accounts every morning. Because of direct debits, a transaction account isn’t that much different than a wallet. I wouldn’t like to be in a position where I don’t know how much money I have, so I wouldn’t know what my spending limits are.

Allison (#4,509)

@grobel I check in once a day or so mostly because I’m bored at work and it seems like a grown up use of my time.

gl (#5,458)

@grobel I check mine approximately once a month. Because my job doesn’t offer direct deposit (we get paper checks, ug), I have to keep a ridiculously high balance in my checking in order to waive the monthly fee. It’s $1500; I try to keep $2000 in at all times so that if I withdraw cash from an ATM I’m not going to dip down to $1499 and get charged $12 which happened once and I was angry for DAYS. All of which to say! I check at the beginning of the month that I have $2000 + rent + automatic cc payment in my account. If I have more than that I transfer it to savings; if I have less I transfer from savings to checking. This is also when I check my cc statement/transaction list to make sure nothing was charged that shouldn’t have been. This works for me because a) my spending from month to month is incredibly regular and predicable and b) I also keep a spreadsheet where I keep track of what I spend during the month which gives me a good sense of if I’m keeping it in bounds.

limenotapple (#1,748)

@loren smith I’m kind of curious about paying your credit card bill every day. I pay my card once a month, when I get the bill, and have never paid anything in interest. Do different cards calculate interest differently? I’m pretty careful about reviewing my bill, so I’m sure I have paid no fees or interest. Is it just a strategy to make sure it never gets overlooked?

sea ermine (#122)

@limenotapple For me, I pay it every time I make a purchase and it’s purely a mental thing. I could wait until the end of the month and it would be fine but I’m very scatterbrained so I check my bank accounts daily to make sure I know what I have and I pay my credit card whenever I make a purchase so the balance is almost always at $0.

The one exception is if I buy something online, I wait until it arrives so if something goes wrong and I need a refund I haven’t already paid it off.

lemonadefish (#3,296)

@grobel I check a few times a month. Our expenses are pretty level, so unless we have just done something pricey (or need to), it’s not very interesting in there.

Panamanda (#2,713)

@grobel I check 1-2 times a week. I’m actually in a situation right now where I get checks once a week (checks from my two places of employment are staggered), so once a week post-paycheck I go on and make sure everything looks right/bills are paid/money is moved where I want it moved.

klemay (#1,755)

@grobel I signed up to have my bank send me a text every Friday with my balance. I have a pretty predictable budget, but weekends are when I tend to do my spending. Knowing how much I have to work with before the start of the weekend helps me keep my spending in check. I don’t really check my balance otherwise, though.

laureleye (#5,883)

@grobel I used to check my balance multiple times a day for the first year or so after I got my first stable, well-paying job, just in case I suddenly stopped having money to spend, you know? Now I’ve calmed down to something like 2-3 times a week most of the time. More if I’ve got an unusual transfer or deposit I’m waiting for, sometimes less if I haven’t been spending much money.

I also just recently set up low balance alerts on my checking accounts after realizing I went, like, a week and a half without checking, just in case.

Lili (#4,882)

I check once or twice a day. Any kind of financial software would help–you can enter your future transactions and “project” your balance on any given day. (I used to use Moneydance for this. Now I use YNAB which is awesome for budgeting but not as good for projecting IMHO.)

But. Overdraft handling is something I look for in a bank when I’m deciding where to do checking. I’m with a credit union now because, among other things, they will do an overdraft transfer from my savings account with no charge. $12 is better than $35, sure, but come on. It’s your money; I really think some banks want to take advantage of minor mistakes like yours. I would think about looking for a bank that gives you some more options for preventing overdrafts.

samburger (#5,489)

@Lili YNAB FOREVER

seriously I am beginning to feel superior because YNAB makes me so absurdly responsible about money

(Don’t worry I don’t actually feel superior)

SterlingCooper05 (#2,529)

@Lili +1 for YNAB!

joyballz (#2,000)

Honestly, I would call again and see if you can get more of the fees waived, possibly calling directly to the branch where you opened the account. Two is the standard at the bank I work at, but we do have the ability to waive more. Situations in which I’d be willing to waive more: 1. customer is nice to me 2. customer hasn’t overdrafted before or in a long time 3. customer genuinely made a mistake and tried to correct it asap 4. customer has direct deposit aka unlikely to walk away from a negative balance

muush (#521)

@joyballz I agree. Never hurts to ask!

Now that I’ve set up the same alerts that Mike mentioned above, I rarely check my checking account balance, maybe once a week tops. But the real key to being confident in my balance is that I stopped using my debit card for pretty much anything.

Instead, I use an Amex charge card for daily purchases so I have no choice but to pay it off monthly but most importantly, it keeps potential thieves one step away from my actual cash. You also don’t have to worry about pending charges or charge holds or keeping a mental tally until you can check your balance.

Beaks (#3,488)

@forget it i quit I’m pretty much the same way- once a week is just about the max for me. I have notifications for big transactions, and use my credit card for just about 100% of my spending. Usually I’m checking my banking balance just before I pay off my credit card every month, and any time I’m moving around a larger amount of money. Of course, I’m also in a position where I can keep a decent buffer, which makes it significantly easier.

limenotapple (#1,748)

My bank lets me do alerts for almost any type of event that could possibly happen. I also keep a google calendar with all upcoming things, so if I know there is something that only comes out once a quarter or semester or whatever, I have it on the calendar as a constant reminder. I put all my bills on the calendar, in code, even small things. I can get to it anytime I have access to the Internet, and I see it whenever I open my calendar, which is often…I love calendars.

amaeve (#5,095)

I have overdraft protection that only costs $2 for a transfer (yay local credit unions), except I recently drained my savings for unexpected vet bills so unless I overdraft by 4 cents or less it won’t help me now. I also have it set up so I get an email every day that my checking account is below 100, and an email every Friday with my balance no matter what. It helps.

jfruh (#161)

I know this sounds sanctimonius and I swear I don’t mean it to be, but why not keep a checkbook, or use Quicken or something as an online equivalent? You can even enter recurring withdrawls in advance so you can see what’s going to come out when.

I do check my balance online fairly most days, but I also enter any spending that is going to come out of the checking account into Quicken daily, and I always treat the balance in Quicken as my “canonical” balance when figuring out what to spend. This is not just because I’m OCD, but also because things do NOT always show up on my bank account web site instantly, and I wouldn’t want to spend money that’s been spoken for. If the balance online is higher than my balance on Quicken, I generally just assume that it’s because a check hasn’t cleared or something and ignore it. If it’s *lower*, I immediately investigate (generally it’s because I forgot to enter something). I do balance my checkbook every month when I get a paper statement from my credit union, at which time I usually discover a few things I forgot to put into Quicken or mistyped the values for.

I would’ve picked option 2, but then again my old bank’s overdraft protection acted like a credit line that was completely separate from my checking account, and when it kicked in the internet on that puppy was absurd. So not worth it. I’d rather the humiliation of getting my debit card rejected than to deal with the bullshit of getting tons of fees tacked on a separate account. There are very few instances when I need cash that badly or am that far away from civilization where my credit card is insufficient.

Goodie (#5,447)

@EleanorHiggsByson I agree, I would rather the embarassment of no money than pay fees. But I am stingy like that

RobinS (#5,834)

Did you try switching to Simple? (www.simple.com).

I had the same problem with Wells Fargo. With Simple, there’s simply no ‘fees’ for overdraft i.e. they simply cancel the payment going out AND shoot you an email/text telling you what the problem is. No wire transfer fee either, which is big for me. No ATM fee (for their own obviously). AMAZING customer service. And it takes a lot to say that for banking! Good luck!

ceereelyo (#3,552)

I check my account nearly everyday, but especially during the days after payday – aka – pay yo bills day, just to see what is coming out (helps me keep track on what I paid/when I need to pay because sometimes doing it at like 7am, bleary-eyed on a Wednesday causes me to forget). I also started a spreadsheet tracking everything we spend, so if I write a check I write the check number, for how much, and for what/when to expect it to be deposited.

EA_Mann (#5,000)

The capitalone360 checking account lets you overdraft a certain amount and you don’t pay any kind of standard fee – you just get hit with a small interest charge. The overdraft amount starts at 500 but you can request it be increased. It’s been very handy – I’ve had a few mortgage payments take my account into the red by 500$ for 3-4 days and I only paid a couple of dollars (don’t quote me on the exact numbers)

Liz (#504)

Jesus Christ, they charge you $12 per charge for overdraft protection? PLEASE get a different bank if at all possible. That is straight up highway robbery. My bank (PNC) allows for up to two different accounts (savings account, credit card, home equity, whatever) to be linked to your main account for overdraft protection, all for absolutely free.

baby beluga (#5,840)

I have solved this problem by setting my account “zero” at $2000. I always have $2000 in my checking account at the beginning of the month — so I’m basically living on the previous month’s income. For people less neurotic and paranoid than I am, a smaller amount would probably work just as well.

andnowlights (#2,902)

@baby beluga Our “zero” is $1000… but I honestly don’t know why, now that I’m thinking about it. This is above and beyond paychecks, it’s just money I keep in there, which isn’t the safest. Probably should move that back to savings, huh?

Allison (#4,509)

@andnowlights my zero was $1000 but then I started using my CC a lot more so as long as it has enough for my mortgage this time of month, I just chill. (until it gets near $500, then I get a little twitchy)

PicNic (#3,760)

I’ve pretty much always lived paycheck to paycheck and I used to accidentally overdraft a lot (hello accidental $37 on BUTTER I picked up for my mother!). I have Citizens and they refused to link my checking/savings accounts for overdraft protection because I opened the checking account years ago when I lived in another state and then opened the savings account when I moved to my current state. I ended up opting to have my card declined if I don’t have enough money.

I check my balance constantly (~1-2/day) because I’ve had my card cloned twice in the last 10 years. I think the fear of having my card declined keeps me aware of what I have in my account. If something urgent comes up and I need to access money that’s not in my checking, I use online banking from my phone to transfer money from my savings to my checking, which goes through immediately.

I like that I’m not the only one that obsessively checks their balance!

andnowlights (#2,902)

@PicNic I’d switch to a new bank, honestly. It’s such a pain but I wouldn’t be able to stand not having my savings/checking linked if I wanted it to be! I’m thinking about switching banks again, actually, because we moved to what feels like the ONE state that doesn’t have any branches of the bank we’ve used in three different states so far. We do mostly online banking, but it would be nice to have a branch when I need to do things like cash out savings bonds (which I need to do)!

Millipenny (#2,921)

If you use your debit card regularly, you MUST check your balance at least every other day. It’s the only way to really know what is in your account. It takes like 30 seconds and is worth the peace of mind. If your bank does not offer transaction alerts via email, then set up auto-payment and bill due date reminders on your phone. That way, you’ll always have a general idea of what will be withdrawn and when. It will also, hopefully, remind you to check your balance.

IMO, you don’t need to pay for overdraft protection. You just need to be more aware of your spending.

andnowlights (#2,902)

Some days I check it multiple times to see if a payment has gone through so I can update my spreadsheet (I’m one of THOSE spreadsheet people). I check what I’m sure averages out to every day, but if I have to guess, I’d say I check every other day. I use my credit card to pay for EVERYTHING because I’m terrified of someone getting into my account using a skimmed card. Last week I accidentally used my debit card at CVS (Reese’s hearts are very important) and was positive there were going to be $300 worth of charges by the time I got home.

clarie (#5,562)

another idea: if you have direct deposit (or a regular payday) and monthly automatic payments going out of your account, reschedule those payments to occur 2-3 days after your paycheck lands. i have my checking account set up so that all of my regular bills (credit card, netflix, car insurance, etc) are all taken out right after i get paid, so that whatever’s left is spending money for the month.

Goodie (#5,447)

@clarie that is what I do. makes life a lot easier knowing you dont have any big bills coming

lizard (#2,615)

I check a lot because I have a text service set up. Text Bal and it send my balance I can also check the account activity and it’s very accurate aka I leave a store and text and that activity is already accounted for

facepalm (#4,409)

Mint .com probably 3 times/week. I have the app on my phone so it’s a breeze and it alerts me of when a deposit is made over a certain amount (i.e. my paycheck) and when a payment is made over a certain amount (i.e. my rent cleared) Also if I have a balance under $200 I have an alert set up with my credit union. That keeps me on track because sometimes I’m hyper-vigilant and others I’m a super space cadet.

lemonadefish (#3,296)

I use my credit card for everything, and on the off chance that I’ve charged more than I can pay in a month, I’ll carry a small balance until the next paycheck comes in. I don’t have any temptation to just buy things because I can charge it though, so this might not work for everyone. Bonus – lots of rewards points!

@lemonadefish Yep, I love that I can pay my cell phone bill, car insurance bill and storage locker bill with my credit card. I even looked into a place that would take credit card for rent payments, but they wanted to charge a fee to do so.

shannanigans (#3,833)

After years of living paycheck to paycheck and having this happen to me more than once, I created a budget that’s really more of a “balance forecast” sheet.

My budget starts with my bi-weekly paycheck. Then it shows all the bills scheduled to be paid with that paycheck. Bills are ordered by date, with the both the bill amount and the remaining cash I’ll have left. So you have something like:

BALANCE &nbsp $7 &nbsp
Paycheck +$980 $987 Jan 31
Rent -$600 $387 Feb 1
Cell phone -$80 $307 Feb 5
Gas -$120 $187 Feb 8

So now I know that I have $187 to live off of for the pay period. Every day when I check my balance I update the top number, the balance, and remove the paycheck/bills as those dates pass.

So if my balance on Feb 3 is $185, my spreadsheet would look like this:

BALANCE &nbsp $185 &nbsp
Cell phone -$80 $105 Feb 5
Gas -$120 -$15 Feb 8

Shit. I’ve either got to get fifteen bucks into my bank account in the next five days, or put off paying my cell phone or gas bill. But I least I realized that before I overdrafted!

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