When you make a debit card purchase that exceeds the balance in your checking account, you experience an overdraft on your account. You have several options to avoid overdraft charges or to minimize them.
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Overdraft Basics
When you try to purchase a new video game for $50 using a debit card on an account with a $30 balance, you're setting yourself up for an overdraft. Assuming your account allows overdraft charges, the purchase is completed and your account goes negative by $20. Plus, you likely face an overdraft service charge of up to $35, according to "Consumer Reports." If you make multiple overdraft purchases with your card, you may face multiple overdraft fees, depending on your bank's policy.
Protection Strategies
A simple strategy is to decline overdraft services with your bank. With this option, your purchase is declined when you don't have the funds, and you aren't hit with a fee. Another option is to tie your checking account to a savings account from which any overdrafts are pulled. You're still charged a fee for the transaction, but "Consumer Reports" indicates it's normally just $5 to $10. Other options include an overdraft line of credit and simply managing your money better to avoid the possibility of an overdraft.
