Bank Accounts with Overdrafts

Published on 17 July 2012 by Raffick Marday

Bank Accounts with Overdrafts 

Need for an overdraft arises when cash is withdrawn from a bank account and the available balance in the accounts goes nil. In such crisis, the account is said to be “overdrawn”. If there is an advance agreement with the bank account with overdrafts account provider and the amount overdrawn is within the authorised overdraft limit, then the interest is usually charged at the agreed rate. But, if this negative balance exceeds the agreed terms also, then extra charge has to be paid and higher interest rates can be applied.

Thus, if you ever miss out a payment then you can know about the heavy charge that you need to pay. Late payments can trigger a fee that gets you over your overdraft limit, leading to another unwanted charge. If you really want to avoid this headache of spending money on bank fees then follow below mentioned useful tips.

Make a schedule for your bills-

The foremost thing you must do is make a payment schedule for the bills that you have to pay every month. If you have idea of when and how much you have to pay for your bills then you must be better prepared to pay them all together when the time arises. If there are due bills that can be paid at any time of the month, then create a schedule which is most convenient for you.

Prepare a budget

When you know how much your bills are going to be, then you must make a budget to plan how much cash you need every month so that you could pay your bills. But, if there are bills about which you are unsure, then it is advisable to overestimate, because this will keep you safe within the agreed monetary limits. Creating a budget always helps!

Agree an overdraft

If regularly it happens that your money goes down the limit then try and agree an overdraft with your bank. Overdrafts have much lower rates and you will not have to pay heavy fees for an unauthorized overdraft.

Fro more information about bank accounts with overdrafts, visit compare bank accounts

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