4.03 Balance Bank Accounts

Maintaining a Positive Balance

Everyone who has a checking or savings account must be aware of their balance at all times. If you withdraw more money than you have in your account, you will have insufficient funds when your balance goes below zero . This may result in overdraft charges fees charged when your balance goes below zero of up to $36 per transaction. Those charges can add up in a hurry!

Some banks provide overdraft protection to their customers by encouraging them to open a savings account. This savings account can provide the funds if the checking account goes below zero.

The easiest way to avoid overdraft charges is to build in your emergency fund to your checking account, or at least part of it. For example, if you decide that your emergency fund should be $500, then you will make a point to never have your balance go below $500 except for emergencies. Of course, you have to be disciplined. A new pair of shoes is not an emergency.

If you do have a real emergency and have to take $100 out of your emergency fund, you will need to hold off spending during the next month to build your balance back up to $500.

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Bank Statements

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