You Can Link Your Checking Account to a Savings Account, Line of Credit or Credit Card to Cover Overdrafts
Many people are unaware that their bank or credit union probably has a service that allows you to link your checking account to a savings account, line of credit or credit card to cover overdrafts. Most banks and credit unions don't automatically setup this service when you open an account, you have to ask to have the accounts linked.
The average person only keeps enough in their checking account to cover their monthly expenses because most checking account rates are either very low or at zero percent. As a result most people place their extra cash in a savings account because savings rates are better then checking rates. By doing this you run the risk of either having a check bounce and having to either pay a bounced check fee or an overdraft fee.
Neither is cheap, in fact by bouncing a check you might also be responsible for the other parties fees or end up being late on a bill which can also cost you more money. Sometimes this can happen multiple times in one month costing you a lot of money in fees. In addition, interest is charged on any amount that is placed on your credit line or credit card.
The smarter way to cover yourself is linking a savings account which will cost you much less in fees. You should compare the fees to other options to see what is best for you. Some banks also have a minimum transfer amount each time the bank transfers money from a savings account. Be sure to find out whether your bank or credit union has such a minimum.
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