Transcript: Wells Fargo Presents - Making Sense of Overdrafts
Even the most careful people might have experienced an overdraft. In the simplest terms, an overdraft happens when you spend more money than you have available in your account.
For example, let’s say you’ve set up an automatic payment for your car loan so it’s deducted from your checking account each month. You know it’s going to happen, but it slips your mind. After all, life gets busy. You buy groceries, gas up your car, and pay your cell phone bill.
Well, if you don’t have enough money in your account on the day the car loan payment is due, one of two things can happen:
First, the bank can return your car payment unpaid. If this happens, the loan company may apply late fees. This may affect your credit history.
Or, at our discretion, we may pay your car loan payment into overdraft. In this case your car payment will be made on time, and you'll avoid late payment fees. But this will result in an overdraft on your account, and an overdraft fee.
We’ve got some tips to help you avoid overdrafts and returned transactions.
First, keep track of all your transactions, including checks you’ve written that haven’t cleared, automatic payments – like your car loan payment – and every day debit card transactions.
You should also take advantage of the use the free tools that come with your account to keep track of spending.
Send us a text or use the Wells Fargo Mobile app to check your available balance or transfer money between accounts when you’re on the go.
If you’re an online banking customer, enroll in balance alerts to receive a text or email when your available balance drops below an amount that you specify.
Finally, considering enrolling in overdraft protection as a back-up plan. You can link other Wells Fargo accounts, like your savings and credit card, to your checking account, and we'll transfer available funds when money is needed in your checking account to pay your transactions. Transfer or advance fees apply, but it can help you avoid more expensive fees.
No one plans on an overdraft, but by using the tools that come with your account, you can plan on avoiding one.
Have more questions about this? Or any other banking topic? Stop by your local Wells Fargo for a conversation with your neighborhood banker.