An overdraft on your checking or savings account occurs when you do not have enough money in your account to cover a transaction.

According to Reserve Bank still many Australian household is paying around $470 a year in bank fees. With many bank introducing a raft of extra charges for use of overdraft you can make an informed decision about whether it’s worth spending on overdraft fees.

Here some simple steps that you can apply to avoid overdraft fees.

1. Budget

            Budget – Budget no matter how big or small is you’re spending habit having a budget will guide you where is money goes and to identify unnecessary costs.

2. Lookout for your Direct Debit payments

            Most common overdraft mistakes is direct debit default payments – for example your insurance, phone bill just coming out before payday. One way to avoid is to setup direct debit payment after payday.

3. Check your bank policy

            Different financial institutions have different polices on bank overdraft. Best way to find out is to contact your financial institution and ask then explain their fees and charges.

4. Check bank balance

            If you do online banking why not set a side sometime on each week to see the balance on your account.

5. Link your bank account, debit card or savings account

Ask your bank to link your savings to your checking account for overdraft protection.

6. Cheque accounts and ATM deposits

            Allow time for Cheque and ATM deposits clear before attempting to make a payment or drawing on these funds.

Conclusion

In summary, good money management starts with taking responsibility for spending and controlling what comes in out of your saving or cheque accounts. Always have a backup plan to protect your hard-earned money disappear from your eyes.