A young couple sadly flips through their bills.

Worried that rising prices will drain your bank account?Here’s how Dave Ramsay recommends avoiding overdraft fees

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Don’t get hit with fees for overdrafted accounts.

key point

  • Inflation has skyrocketed, so the prices of goods and services are much higher, which also makes it harder for you to stay within your budget.
  • It also increases the risk of bank overdraft fees.
  • Financial expert Dave Ramsay has some advice on how to avoid overdrafts, including developing a budget and paying in cash.

Inflation is at its highest level in 40 years, which means the goods and services you buy every day are a lot more expensive than before. Unfortunately, when prices go up, it can be difficult to spend within your limit and avoid overdraft fees. These fees are charged when you try to spend more money from your bank account than you actually have available in that account.

The good news is that if you follow these simple overdraft avoidance tips from Dave Ramsey, you won’t have to pay expensive overdraft fees.

living on a budget

Dave Ramsey loves to control your spending with a budget. So it’s no surprise that the number one tip for financial gurus to avoid overdraft fees is to develop this type of spending plan and stick to it.

“If you don’t want to spend another dime on overdraft fees, the first thing you need to do is create a budget,” he urged. By setting a budget and sticking to it, you will always ensure that your spending is less than your income. If you don’t spend more than you put into your checking account, then you don’t have to worry about getting overdraft fees.

Of course, it’s easier said than done to make sure you’re actually sticking to the spending limits you set. Tracking your spending can help with this. If you use the app or manually jot down purchases, you can make sure you know exactly where and how much of your budget is spent.

Pay with cash or debit card

Ramsey also recommends changing your payment method to avoid overdrafting your account.

“If you have cash, you always know how much you can spend at any given time (it’s actually in your hands, after all!),” wrote the Ramsay Solutions blog. As for debit cards, while overdrafting is sometimes possible depending on how they’re set up, you can actually choose not to offer this option at most banks.

“Debit cards are convenient because you have to opt-in to the bank’s overdraft system to get those fees,” Ramsay explained. “If you don’t opt ​​in and then overdraw your account, your card will be rejected. Embarrassing? Yes, but at least you don’t have these fees to add salt to your wounded pride.”

Avoid overdraft protection

Ramsay did an amazing thing no It is recommended that you sign up for your bank’s overdraft protection service. Most banks offer this service, but it’s usually not a good deal for you.

“If you overdraw your bank account and you have overdraft protection, your bank may automatically transfer funds from your savings account (or some other linked account or line of credit) to your checking account to cover the difference. But many banks You will also be charged for this ‘service’,” Ramsay warned.

Ramsay is absolutely right on this. You don’t want to pay for a service designed to save you money. What you can do, however, is choose a bank that doesn’t charge overdraft fees at all. More and more banks have done away with them, and it’s worth looking for a bank that won’t charge you for not having enough money, making your situation worse.

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