by BECU Financial Advisor,posted Oct 27 2011 1:11PM
Recently Bank of America announced that it would no longer be charging overdraft fees on debit transactions. Rather, if the funds were not available they would simply deny the transaction. I guess if I were purchasing a $3.50 latte I would rather have the transaction declined that pay the $35.00 fee (or more if I had multiple transactions in one day) however, it is possible to have it both ways, getting the transaction to go through and avoiding the fees.
While I advocate keeping a small cushion in your checking account to cover situations like this (we all make mistakes), you may also be able to link either a savings account or a line of credit to your checking account to cover a transactions where you do not have sufficient funds. It would work something like this. You purchase the $3.50 latte and you do not have the funds in our account. Instead of denying the transaction the funds are automatically transferred from your saving account or line of credit to cover the transaction. If you rely on your savings account just beware that REG D limits the number of transfers from your saving account to 6 a month.
Check with your financial institution to see what options you may have but also make sure that you know what your fees will be. There are financial institutions that will not charge a fee for this service so if you are not happy with what you are being presented with you may want to shop around.