The One Banking Fee It Pays to Avoid in 2023

Steering clear could save you a lot of money.

These days, a lot of people are running into financial issues due to the fact that everything from food to transportation to housing costs more than it normally would. And so you might innocently swipe your debit card to complete a transaction without realizing you don't have enough money in your checking account to cover it.

In that situation, your debit card may not get declined. Instead, the transaction in question might go through, thereby dropping your checking account balance below $0.

When that happens, your bank won't necessarily just let it slide. Many banks still charge fees for overdrawing your account, which can be very costly. And so it's in your best interest to avoid overdraft fees in 2023. Here's how.

1. Be mindful of your spending

The more in tune you are with your spending, the less likely you'll be to get hit with overdraft fees. Set up a budget that allocates money to each expense category on your list every month. And do your best to stick to your budget to help ensure that your paychecks are able to cover your expenses.

Also, if your checking account balance is running low, take a peek at what it looks like before making any non-essential purchases. It's one thing to overdraw your account to buy groceries and put food on the table, but it's another thing to get hit with overdraft fees because you went and purchased a new gadget you didn't need to buy right away.

Keep in mind that there are some budgeting apps that make it really easy to track your spending. They'll even link up to your checking account so that every time you make a purchase, it's accounted for and assigned to an expense category. Many of these apps are free to use, so you may want to play around with different options and see if you find one that works for you.

2. Build up some cash reserves

Having some money in savings could help you avoid overdraft fees. If you link your savings account to your checking account and the latter account runs out of funds, you can generally do an electronic transfer on the spot. And that way, you won't end up overdrawing your account.

3. Switch to a bank that doesn't charge overdraft fees

Although overdraft fees haven't gone away, a number of banks have done away with them over the past year or so. If you move over to one of these banks, you won't have to worry about facing that expense.

Overdrawing your checking account is never a good idea. But you especially don't want to end up in a situation where you've spent more than your account balance and are now stuck paying a costly fee. If you're in a situation where your checking account is out of money, it means you probably can't afford to get hit with an overdraft fee. So you should do your very best to avoid that fate in the new year.