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How to Avoid Overdraft Fees

These tips can help you avoid overdrawing your checking account.

1. Keep tabs on your account balance. There are many ways to do that.

  • Use free Online Banking and Mobile Banking where you can see your current and available balance 24/7, review account history and view pending debit transactions.
  • Set up account alerts in Online Banking so you’ll receive a daily message to your email or mobile phone with your available account balance. Or you can set it up to be notified whenever your available balance goes below a certain amount that you specify.
  • Use free QuikLine Phone Banking – Call (804) 323-2000 or (800) 285-1096
  • Keep receipts and immediately subtract all your debit card purchases, checks, auto deductions, and other withdrawals from your checking register.
  • Balance your checking account regularly. Use the balancing form or calculator (Excel).

2. Maintain an adequate checking account balance to cover the unexpected or if you make a mistake.

3. Sign up for overdraft protection. Set up your checking account to transfer money from your savings account or a line of credit if you overdraw your checking account. A transfer fee still applies, but it will be much less than an overdraft fee. The transfer fee applies only if funds are needed to cover an overdraft on your checking account.

4. Be aware of holds for pending debit card transactions. If you use a debit card, stay alert to pending transactions which reduce your available balance.

  • The hold lasts until the final transaction amount comes through. Please be aware that this could be a few hours or even several days later.
  • Because the hold will reduce your available balance, it can trigger an overdraft fee if your available balance goes below zero. Your available account balance must be adequate to cover the merchant’s upfront authorization hold or the transaction amount – whichever is larger.
  • With certain transactions, the merchant may submit an upfront authorization that places a hold on your account that is different from the final purchase amount. This is true when the final amount is unclear, such as when buying gas at the pump, paying for a restaurant meal where the tip is added later, checking into a hotel, or renting a car or equipment.

When buying gas:

When using your debit card to buy gas at the pump, the merchant’s card processor submits an upfront authorization that places a hold on your account, which can be as much as $75 – $150, even if you only buy $20 worth of gas.

If your available balance is low, there are better options for paying at the pump:

  • Go inside – If your available account balance may go negative if an upfront authorization hold is placed on your checking account, go inside the gas station and tell them how much gas you want. Normally, the merchant will then submit an authorizing amount equal to the amount of gas that you buy.
  • Cash – Pay with cash.
  • Credit card – Use your credit card if you have available credit and pay off your balance monthly to avoid interest charges.