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How to Avoid Overdraft Fees
June 13, 2025
by Partner Colorado Credit Union
Overdrafts can sneak up on anyone—one forgotten subscription, one poorly timed bill payment or one small debit card swipe can trigger a fee that throws off your whole budget. While occasional mistakes happen, consistently overdrawing your checking account can lead to mounting overdraft fees and unnecessary financial stress. The good news? With a few simple habits and tools, you can take control of your account and avoid overdrafts altogether. Here are some practical ways to avoid overdraft fees and keep your money where it belongs.
Start by listing all predictable incoming money, like paychecks and transfers, and then list all predictable outgoing money, like rent, car payment and streaming services, on a monthly calendar. Or you can use our free online personal financial management tool, My Financial Partner, to track your spending.
Seeing the timing of deposits against withdrawals helps you spot the “low-points” when your balance is most vulnerable. If a big bill regularly hits before payday, talk to the biller about moving the due date or set aside a mini-reserve in advance so you’re not short.
Aim to keep a “cushion” of at least one week’s expenses, for example, $300 to $500, in your checking account. Mentally treat this as $0, like it’s not even there.
For example, if you have a balance of $1,000 in your checking account and want a cushion amount of $300, treat your balance as if there’s only $700 there. That way, you’ll be less likely to overdraft your account.
Most mobile banking apps, let you set automatic email, push or text alerts for low balances and large transactions. Choose a dollar amount that gives you enough time to react to low balances—like $100. You can also choose a dollar amount that notifies you when a transaction is made above or below the specific amount you choose. Alerts only work if you read them, so resist the temptation to swipe them away unread. One glance at the notification can save you overdraft fees.
Most credit unions let you link an overdraft line of credit to your checking account. When your balance runs low, funds automatically transfer over to your checking account. Think of it as a financial airbag—you hope never to deploy it, but it’s there if you need it.
Use your credit union’s Bill Pay service to control exactly when payments leave your account. Scheduling a bill for the afternoon of payday rather than the day before can be the difference between being covered and having an overdraft fee.
Only reviewing your statement once a month when your new monthly statement becomes available, isn’t always enough. Start a five-minute Sunday ritual (or whatever day works best for you). Open your mobile banking app, review recent transactions and compare against receipts to check for errors. Small errors like double charges are easier to fix if you catch them early.
Avoiding overdraft fees is mostly about visibility and timing. By tracking your cash flow, maintaining a cushion, using alerts and arranging smart backups, you’ll eliminate almost all surprise negative balances and overdraft fees. If you need help setting any of these tools up—or want to explore options like overdraft lines of credit —reach out to us. We’re here to keep your money working for you, not against you.
Map Your Cash-Flow
Start by listing all predictable incoming money, like paychecks and transfers, and then list all predictable outgoing money, like rent, car payment and streaming services, on a monthly calendar. Or you can use our free online personal financial management tool, My Financial Partner, to track your spending.Seeing the timing of deposits against withdrawals helps you spot the “low-points” when your balance is most vulnerable. If a big bill regularly hits before payday, talk to the biller about moving the due date or set aside a mini-reserve in advance so you’re not short.
Build a Cushion
Aim to keep a “cushion” of at least one week’s expenses, for example, $300 to $500, in your checking account. Mentally treat this as $0, like it’s not even there.For example, if you have a balance of $1,000 in your checking account and want a cushion amount of $300, treat your balance as if there’s only $700 there. That way, you’ll be less likely to overdraft your account.
Turn On Alerts
Most mobile banking apps, let you set automatic email, push or text alerts for low balances and large transactions. Choose a dollar amount that gives you enough time to react to low balances—like $100. You can also choose a dollar amount that notifies you when a transaction is made above or below the specific amount you choose. Alerts only work if you read them, so resist the temptation to swipe them away unread. One glance at the notification can save you overdraft fees.
Link a Line of Credit
Most credit unions let you link an overdraft line of credit to your checking account. When your balance runs low, funds automatically transfer over to your checking account. Think of it as a financial airbag—you hope never to deploy it, but it’s there if you need it.
Schedule Payments Strategically
Use your credit union’s Bill Pay service to control exactly when payments leave your account. Scheduling a bill for the afternoon of payday rather than the day before can be the difference between being covered and having an overdraft fee.
Review Your Transactions Weekly, Not Monthly
Only reviewing your statement once a month when your new monthly statement becomes available, isn’t always enough. Start a five-minute Sunday ritual (or whatever day works best for you). Open your mobile banking app, review recent transactions and compare against receipts to check for errors. Small errors like double charges are easier to fix if you catch them early.Avoiding overdraft fees is mostly about visibility and timing. By tracking your cash flow, maintaining a cushion, using alerts and arranging smart backups, you’ll eliminate almost all surprise negative balances and overdraft fees. If you need help setting any of these tools up—or want to explore options like overdraft lines of credit —reach out to us. We’re here to keep your money working for you, not against you.