Avoiding Overdraft Fees: How to Protect Your Finances and Save Money

At City National Bank of Florida, we believe in helping our clients achieve financial peace of mind.  

One of the most common sources of financial stress is overdraft fees, which can catch you off guard and quickly add up. These fees can have a significant impact on your finances. That’s why we’re committed to raising awareness of overdraft fees—how they work, how they can affect you, and, most importantly, how you can avoid them altogether.

Our goal is to empower you with the knowledge you need to manage your accounts effectively and keep your hard-earned money where it belongs—working for you.

What Are Overdraft Fees?

An overdraft is a negative balance in your account, this occurs when you spend more money than you have available in your account, and your bank covers the difference. For example, if you write a check or set up an ACH payment for $150 but only have $100 in your account, your bank may approve the payment but charge you an overdraft fee to cover the $50 shortfall.

How to Avoid Overdraft Fees

While overdraft fees are a common occurrence, they’re also entirely avoidable. We want to help you reduce or eliminate these fees with a few simple steps. Here’s how you can protect yourself:

1. Monitor your balance regularly: The most effective way to avoid overdraft fees is to stay on top of your account balance.
   
   What to do: Make it a habit to check your account balance daily or weekly. Whether you prefer writing transactions in a check register or using the CNB mobile app, consistency is key. Spend a few minutes reviewing your balance after making purchases or withdrawals to ensure everything adds up.

2. Link Your Accounts: If you want to avoid overdrafts, consider linking your checking account to a savings account. This allows us to transfer funds from your linked account to cover any shortfall, often for a lower fee than traditional overdraft fees.

3. Set Up Alerts: Enable balance alerts using your mobile app that notifies you when your account balance is low. You can set these alerts to receive text messages or emails whenever your balance drops below a certain threshold, giving you time to transfer funds before a potential overdraft occurs.
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   Looking for easy ways to check your balance? Text ‘BAL’ to our messaging number (454545) to receive your current and available balance. You may also text ‘LAST’ to review your last five transactions.¹
   
   Please note: To use City National Banks of Florida's text message banking, you must currently be enrolled in CNB Online Banking AND have a mobile device with text messaging capabilities enabled through your mobile provider. ¹ To learn more about this service, please visit our FAQs.

4. Double-Check Your Monthly Statements: Your monthly bank statement is more important than you might think. It’s a snapshot of your account activity, and reviewing it is a great way to identify errors, missing transactions, or forgotten expenses.

5. Use your Debit Card Wisely: Your debit card is a convenient way to make purchases, but it’s not the same as a credit card. Unlike credit cards, debit card purchases immediately deduct money from your account.
   
   ‍Avoid this mistake: Never use your debit card for purchases if you aren’t sure there are enough funds to cover the cost. Think of your debit card as a digital check—it only works when the money is already there.

6. Stay on-top of Automatic Payments: Automatic bill payments are great for convenience, but they can catch you off guard if you’re not careful. Missing a scheduled payment could easily push your account into a negative balance.

FAQs

• What are overdraft fees? Overdraft fees are charges that occur when you spend more than the available balance in your account, and your bank covers the difference.  

• How to avoid overdraft fees? Track your spending, link accounts, keep a buffer in your account, set up alerts, and make sure to understand the fee structure and policies.  

• Is an overdraft fee different from a returned item?  Yes. A returned item, or non-sufficient funds (NSF) item, occurs when your bank returns a transaction (such as a check or payment) unpaid because there are insufficient funds in your account to cover it, meaning the bank does not process the transaction.

We are here to help you avoid overdraft fees and take control of your finances. By staying informed and taking proactive steps, you can reduce or eliminate unnecessary charges and keep your finances on track.  

¹ Data rates may apply

Please note: The content in this article comes from individual opinions and experiences. The content should not be taken as advice coming from City National Bank of Florida. City National Bank of Florida does not offer tax, legal or accounting advice