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Avoiding Overdrafts

If you’ve ever experienced an overdraft to your checking account, you’re not alone. According to The Financial Health Network, studies show that 16% of all Americans with a checking account experienced an overdraft to their account in 20201, with about 28% of those people reporting at least 5 overdrafts in a year. Overdrafts are not cheap and can lead to quite an expensive bill or even the cancellation of the account. Here are a few things you can do to help avoid an overdraft to your checking account.


The first thing you can do to help avoid an overdraft to your checking account is to create a budget. A budget helps to ensure you know exactly how much money you’re bringing in and exactly how much money is going out. To create your budget, you’ll first track all your spending throughout the month and get an idea of what categories you’re spending money on (rent, utilities, shopping, groceries, etc.) and how much you spend in each category. At the end of the month, you’ll compare how much you spent to how much you brought in. From there, you can see if you need to make any adjustments to your spending habits and designate a set dollar amount to spend in each category for the month. Now, you have your budget. As long as you stay within your spending budgets you shouldn’t spend more than you’re making, helping you to avoid an overdraft to your checking account. If you need help planning your budget, Cash Central has a Budget Planning Tool that can help.

Use Cash

One of the best ways to ensure you stay within your budget is to use cash for spending whenever possible instead of a debit card. When using a debit card, it can be easy for spending to get away from you because you aren’t seeing a physical trail of the money as you spend it. It’s like an out of sight out of mind situation. After you’ve set your budget, take out cash and divide it up according to your budget amongst the categories you’ve selected and use this to spend instead. Then, once the cash is gone for a given category, you’ll know for sure you don’t have any more to spend in that area. Doing this will ensure you’re staying within the budget you’ve set and will help protect you from overdraft since you’ve taken out only what you know you have available to spend. Plus, it may help you save money too, as studies show you are more likely to reconsider a purchase2 when spending cash.

Set Up Alerts

Many financial institutions offer the option for customers to set up account alerts on their checking account or debit card. There are often several alerts available, but there are a couple of key alerts that could help you avoid an overdraft. One of those alerts is a transaction alert. This is an alert that will send you a notice if an attempted transaction is over a certain dollar limit, which is usually a limit you choose. In addition, you may be required to respond to the alert to authorize the purchase. This alert can be useful as it will give you an extra moment to consider the purchase and check your account balance before authorizing the purchase. It’s also a great option for when you have more than one person using the account, or when you have automatic transactions set up you may not be actively thinking about. Another great alert you may be able to utilize is an account balance alert. With this alert, your financial institution will send you a notification if your account balance falls below a certain dollar amount. Just as with a transaction alert, you can usually choose at what dollar amount you receive the notification. Using both alerts together, if available, could help you to keep better track of your account balance and help prevent an overdraft.

Cash Central

Of course, when it comes to avoiding an overdraft Cash Central always has your back. With us in your pocket, you can have peace of mind in knowing you can cover an unexpected or emergency expense, without dreaded overdraft fees. Log in to your account, any time day or night, to request a loan*. Funds from your loan will be deposited directly into your checking account as soon as the very next business day**. To see the loans available in your state and their costs, visit our Rates & Terms page.

*In California, deferred deposit loans are provided in accordance with the Department of Financial Protection and Innovation pursuant to California Deferred Deposit Transaction Law, Cal. Fin. Code §23000 et seq.

**When application is submitted by 7:45 PM EST. Customers entering into their first loan with Cash Central may experience a delay in loan funding.


1Arves, Stephen, Greene, Meghan. (2021, Sept 3). Retrieved from: https://finhealthnetwork.org/amid-resurgence-of-interest-in-overdraft-new-data-reveal-how-inequitable-it-can-be/

2Gravier, Elizabeth. (2021, Jul 1). Retrieved from: https://www.cnbc.com/select/cash-debit-or-credit-for-everyday-purchases/