It’s happened to most of us at one point. We lost track of our spending for just the tiniest moment and receive a shock when we check our bank balances and come to the realisation that we’ve let our bank account go into overdraft. Yikes! What’s worse is that on top of having to pay the overdrawn amount, we’re also left paying a large fee and interest until we bring our account from a negative balance to a positive one.
There is no need to get yourself into an overdraft and create unwanted stress for yourself. You can avoid using an overdraft and the fees that follow if you take a few small precautions.
Track your income and expenditure
So much of our banking is done electronically these days and we even use our debit cards to do our shopping. As a result, it can be difficult to know what has been spent. It can be even more of a challenge if you have more than one person using the account. Keep tracking your income and expenditure so that you know at all times what you have in your account. You can use a money tracking app, create your own spreadsheet, or just grab an ordinary notebook and record everything that goes into and out of your account. By tracking your income and expenditure, you will be able to see if your account is getting low and curb your spending until your next payday.
Create a cut off balance to avoid overdraft fees
Most current accounts held with banks do not allow you to overdraw your account without a prior arrangement. However, many people forget that the bank will automatically take out fees on the first of every month or you may have some automatic payments that occur every month. You spend or withdraw everything but a few pounds and then these payments come due and are deducted sending you into a negative balance.
Decide on a cut-off balance when spending must stop. It can be just enough to cover the monthly fees and automatic payments, or you can choose a cut-off balance that also includes some savings. This will have you covered for all the monthly expenses that are deducted from your account and leave you a buffer in case of emergency.
Get a prepaid card
If you find yourself heading towards an overdraft with alarming regularity, you might be better off getting a prepaid card. With a prepaid card, you can only spend whatever money is on the card. This is the perfect solution for those who have trouble balancing their accounts and staying out of an overdraft situation.
Try to stay out of the overdraft trap and avoid those hefty fees. Look at where you can cut spending and make sure you know where you’re spending. going overdrawn in your account won’t just result in unnecessary fees as you can also end up damaging your credit score. This will make it difficult for you to apply for loans and the bank may limit other services. With a little care and focus, you can avoid the financial hamster wheel of overdrafts and fees.
At Suits Me, we don’t only offer our account holders a Mastercard® prepaid card, but an account that comes with a whole variety of banking features so our account holders can manage their money with ease. Some features also offered with our accounts, include:
- The ability to set up standing orders
- Manage direct debits
- Send money home via payment transfers
- Gain access to our exclusive cashback reward programme
- Access to our online banking and mobile app for easy banking, 24/7
You can open a Suits Me account within minutes with no credit checks. We accept 99.8% of all applicants and once your account has been opened, you can start managing your finances immediately.