While some bank account holders may be happy to see the end of overdraft fees, other consumers are upset they may have their card declined for important bills if there are insufficient funds. However, SmartMoney.com says this is not a good enough reason to opt for overdraft protection, and is offering five ways to curb overdraft fees.
Carry backup cards
Cardholders who don’t opt in for overdraft coverage but carry borderline balances still may get turned away at the register. Consumers should keep at least two or three backup cards in their wallet and a little cash just in case, says Odysseas Papadimitriou, the CEO of Evolution Finance, which publishes CardHub.com, a credit card comparison web site. “Keeping an extra one or two credit cards on hand can help prevent running out of payment options if some sort of fraud-related hold strikes your account,” he says.
Balance your checkbook
To avoid needing a backup, account holders should keep an eye on their account balances, says Papadimitriou. They should check weekly, or even daily if they’re operating on the edge, he says. Then, cardholders should be vigilant about withdrawing funds from retail stores that offer cash back on debit-card transactions. Although banks will generally alert customers if they’re about to go over their limit at ATMs, in-store debit withdrawals typically won’t trigger any overage notification, Papadimitriou says. It’s still not clear whether this problem will be fixed when the overdraft coverage opt-in provision takes effect, he says.
Sign up for payment alerts
Cardholders given to procrastination should consider signing up for payment alerts, says Papadimitriou. Most card issuers, including JPMorgan Chase (JPM: 39.04*, +0.10, +0.25%), American Express (AXP: 39.15*, +0.14, +0.35%) and Bank of America, have long offered to alert their customers when account overages occur or when payment due dates are imminent. “We’re trying to help customers to reduce overdraft fees,” says a BofA spokesman. “We don’t want them to buy a $40 cup of coffee.”