Overdraft Protection Fees
Many people tend to have overdraft protection added to their bank account, it can seem to be helpful at times when your bank balance has run a bit low. But having overdraft protection is an added fee on top of the regular fee from your standard checking account, and this does add up when considering the actual amount charged.
So what are these fees?
Most of the major banks in Canada tend to have very similar charges, that being $4 a month, plus interest on overdrawn amounts which tend to be around 21% per annum.
If you find that you are using your overdraft protection on a regular basis, you should start to review your spending habits. Constantly using your overdraft is costing you extra each month.
You will need to start properly tracking all your expenses and income to help see where the issue may be. Going back over your spending for the past few weeks/months and sorting them into proper spending categories can help shed some light on the problem spending areas. Once you have spotted the problem areas, then you can work towards doing something about this.
Many banking institutions offer premium checking that can allow you to waive your banking fees if you maintain the monthly minimum balance. Granted you will need to have a few thousand dollars in your account to help waive the fee and remember to keep check each year, as the major banks can up this limit. Having enough money in your account to help waive the fee can save you $130 or more per year depending on your Bank and the plan that you are on.
Keeping cash on hand is another good way to avoid going into overdraft. If you do not have enough cash on hand, then you cannot purchase that item. Easier said than done for some, leaving the credit card at home and going cash only, but if you have a habit of overspending, then this could be a viable option to help curb your spending.
There’s always the option of opting out of overdraft protection. Other options. You can begin using our simple method of tracking spending, and you can work on taking control of your managing your bank accounts.