Anyone who has ever been slapped with an overdraft fee knows how expensive and frustrating it can be. You get hit with an overdraft fee when you spend more than what is in your account, causing it to become overdrawn.
Currently, the average overdraft item fee for each transaction that results in any negative account balance is $35.20 at the 10 largest banks in America. The fee at the top 10 banks all fall around the average, without any outliers — $36 being the highest and $34 the lowest.
Banks may have overdraft balance threshold that allows a customer to have a negative balance up to a certain amount. For example, PNC Bank has an overdraft balance threshold at $5, which means you will not be charged an overdraft fee as long as your negative balance is less than $5.
Compare the overdraft fees at the 10 major U.S. banks:
|Bank of America||$35|
|U.S. Bank||$36 (Free if item is $5 or less)|
Overdraft fees may happen due to lack of funds, or confusion as to when those funds will actually be available to you. Either way, this is a costly mistake that can be avoided with the right kind of planning.
Generally, funds from deposited checks will become available to you most immediately, but under various circumstances, the bank may place a hold on these funds. Until these holds are lifted — after which time your check will be cleared — the money will not be available to cover your expenses.
Double checking your available balance can protect you from making the mistake of overdrawing from your account.
Account Balance vs. Available Balance
There is a difference between your account balance and available balance.
The account balance shows the entire amount posted to your account, including funds that have yet to clear, while the available balance shows the immediate amount that is accessible to you for use or withdrawal. Confusing these two numbers may cause you to spend more than you actually have in your account.
It would also be wise to protect yourself by having a little extra cash in your account that can act as a buffer to prevent you from dropping to a negative balance. You can also set up alerts (via email or text) through your bank to remind you when you’re funds are nearing a low balance.
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