Finding the right financial balance is never an easy path to negotiate, especially during tough financial times. Payday loans and cash advance loans are usually taken out by customers who are facing immediate financial hardship. Borrowing money on a short term emergency loan, can in some cases help borrowers avoid overdraft fees, which could run into the hundreds of dollars depending on the number of outstanding checks a borrower may have at any give period of time.
According to a recent study from the ABA (American Bankers Association) in 2008, banks are likely to have charged upwards of thirty billion in overdraft fees to consumers. These figure are staggering numbers to customers who in most cases pay in excess of $100 per occurrence, at the tune of $25 to $35 for each item that is overdraft. The ABA recommends several items a customer should address to help avoid unnecessary overdraft fees.
• Keep a reserve fund or separate savings account for unexpected emergencies
• Ask your bank to set up an overdraft protection on your checking/debit card accounts
• Keep thorough records of your spending, software programs such as quickbooks can help you visualize your spending habits and make sure you don’t go over your budget
• Set up access to your accounts online so you can verify balances anytime
• Enroll in direct deposit so you avoid paying check cashing fees and can access your money instantly on payday
Financial planning is the best way to avoid paying unnecessary fees to your banks and credit unions. You should only explore cash advance and payday loans when you have a financial emergency. Know your borrowing options prior to applying for a loan and avoid the trap of repeat borrowing to avoid living paycheck to paycheck are some of the most common pieces of advices from financial advisors. One of the best pieces of advice, is make sure you are working with a bank that appreciates and wants your business. If you have an accidental overdraft it never hurts to ask the local branch manager to waive all or a portion of your overdraft fees. Remember that banks are continually marketing themselves for new customers and use this to your advantage if you are in a financial bind and need some leverage with your current bank, it never hurts to ask for a break.