A bank overdraft occurs when expenses exceed the amount available in your checking account. These 3 tips will help you manage it better!
It can happen to anyone to be in the open. Expenses add up and sometimes the bank account empties faster than expected. Do not panic ! You can apply several tips to avoid being in the open. The first thing to do is learn to manage your budget. This is the key to always having an eye on the expenses of the month. So, start by creating a document in which you indicate your starting budget: it can be your salary or the sum of salaries including that of your partner. Then deduct all your fixed charges: electricity, water, internet subscription, Netflix… Once you have withdrawn all your expenses, you get your real budget for the month. If you have a mandatory but unforeseen expense to incur during the month, deduct that too.
It is then a question of distributing a goal not to be exceeded in each category of expenditure. For example, no more than 50 euros in shopping this month, no more than 100 euros in outings… This allows you two things. The first: to know where your money goes and the second, to track your expenses in order to avoid the overdraft. But sometimes, overdraft is inevitable, especially in these times of rising food, gasoline and energy prices. How to do in this case? Here are 3 tips!
1 / Establish an overdraft authorization with your bank
If you happen to be often overdrawn, agreeing on an overdraft authorization with your bank is a solution. In return, you will always pay debit interest (agios) but these are negotiable and can be set lower than what you would have paid if you had been overdrawn without authorization. Note: the latter can be revised or canceled. “The ceiling and the duration of the overdraft are provided for in the account agreement or in the exceptional authorization, specifies the government website. However, the overdraft cannot exceed 3 consecutive months. If it is more than 3 months, the bank must make you an offer of credit, valid for 30 days ”.
2 / Negotiate the agios
Did you know ? There are agios and agios. If the term refers to a set of charges levied by the bank on an overdrawn account, there are several types of charges. Fixed fees, which banks charge for each overdraft situation, even if it is not huge. And the proportional premiums, which are calculated according to the duration, the amount of the overdraft and an interest rate. You can also negotiate these proportional fees with your banker, to pay less during the next period in the red.
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3 / Use your savings
If you are lucky enough to have some money aside, it is possible to make a transfer to make up your overdraft. We advise you to set alerts on your phone, in order to be warned and to be able to bail out on time.