ON THE MONEY > LIBRARY > FINANCE > STAY READY FOR THE UNEXPECTED
Keep Your Checking Account Ready for the Unexpected
What is Overdraft Protection?
Overdraft protection is a service offered by banks and credit unions that allows you to complete transactions even when you don’t have enough money in your account. When you sign up for overdraft protection, the financial institution covers the shortfall, typically by linking to another account you own or by extending automatic coverage that must be repaid with a fee.
The Cost of Convenience
Overdraft protection ensures your transactions go through. However, this convenience can come at a price. Many banks and some credit unions charge an overdraft fee each time the service is used. If you continue making small purchases, you could incur multiple fees before you realize there’s an issue. Redstone Federal Credit Union offers overdraft protection options, such as a Personal Line of Credit loan or a link to a share savings account, which may be less expensive than using overdraft protection. To learn more, ask us about these plans.
Using Overdraft Protection Wisely
Overdraft protection can provide valuable peace of mind when unexpected expenses arise. However, it's still important to monitor your account balance and maintain healthy financial habits. We know life happens, so here are a few strategies to help keep your account on track and reduce the need to rely on overdraft protection.
Creating a Plan for Unexpected Expenses
Overdraft protection may be a good option for you if your financial institution offers it for little to now fee. However, you may want to institute these practices so you rarely have to use this feature:
Alerts and Tools
Set up low balance alerts to help avoid accidental overdrafts and utilize budgeting tools or apps that monitor your spending and ensure you have enough funds to cover your transactions.
Link Accounts
Link your Redstone checking account to a line of credit or savings account. This way, funds can be transferred automatically to cover shortfalls, often with lower or no fees.
Keep a Buffer
Maintain a buffer in your checking account. Keeping an extra $100 or $200 in your account can act as a cushion, thus reducing potential overdraft situations.
Additional Resources
Personal Line of Credit
An open-end credit line that gives you the flexibility to handle life's ups and downs with confidence.
Redstone Checking Accounts
Choose from three accounts that are packed with convenient tools to help you manage your finances anytime, anywhere.
The Basics of Personal Finance
Mastering your personal finances can be empowering, helping you build a secure future to live the life you want.