Credit Card Management - Avoid Debit Overdraft Fees!

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April 03, 2008

Credit card companies give people not just little plastic devices to pay for goods and services, they give customers more financial freedom and opportunities. A loan or a credit card enables you to make purchases that you would have never been able to afford using your savings. But together with that freedom you are obliged to follow pretty strict rules and regulations.

You have to be accurate with your monthly credit card payments, you are not to exceed your credit limit, you should better not go overdrawn, and other numerous musts and don'ts. Otherwise you are imposed penalty fees, can get rejected when applying for another credit card, and put your credit history at risk.

If you cannot qualify for a credit card deal for some reason, you can consider getting a secured credit card or a debit card. Of course, debit cards cannot give the advantages that credit cards give, but still you do not have to carry a bunch of cash with you, you will not have any APR accrued to your balance on a debit card (at this point debit cards are better that credit ones), and with a debit card you will acquire the basics of credit card management skills.

But, unfortunately, debit cards are not exempted from various fees. Overdraft fees are not an exception.

Overdraft appears not less frequently than late or missed payments. Overdraft fees vary, on the average, the fee makes up about $ 30, but still it can mess up your financial standing. Besides, negative balance is often a result of some bank mistakes and system complications. So, how can you avoid those overdraft fees?

If your overdraft is a bank's fault, you will not be charged any penalty fees for that. You just need to contact your card issuer and clear up the situation, instead of leaving the situation as it is and hope that your bank will fix everything without your interference. Banks are always ready to get some extra money, even unjustly. So, you are to keep an eye on your lender.

To secure yourself from the undesirable fees for carrying negative balances, you are to think about some overdraft protection systems. Actually, those very penalty fees and rates are a weighty argument for you to be more accurate with your credit behavior and spending habits. Self-control can be a good way of protecting your debit card from overdrafts. But it is not always easy to control your wishes and needs.

In order to get a more "material" protection from overdraft fees, you can sign up for an overdraft protection plan on your account. The bank will set an overdraft limit on your account. And if the amount you overdraw is within the agreed overdraft (that is on your contract), you do not get penalized. The overdraft limit is a more effective way to prevent overdrafts. You will just physically not be able to spend more. Your check, if exceeds the agreed amount, will be declined.

The overdraft option can be really helpful at times. You just need to stick to the happy medium principle, take measures in order to protect yourself from hefty fees for your overdrafts, and you will learn the rules of managing credit cards. Later on, when you are eligible to qualify for one of the best credit cards, you will avoid many problems with your credit card management. So, credit or debit cards - you are to be a responsible and reasonable person to build up your financial health.