An overdraft is nothing more than being in the red on a bank account . The term is used as a formalism in the banking field and you will be able to see it in some of the concepts of bank transactions that appear in your accounts if you have ever been in this situation.
I remember that years ago there was no problem with being in the red for a few days but the banks suddenly changed their minds about it, they no longer let you enter the money within a period but payments bounced and, to make matters worse, they included a " Overdraft " so you think twice next time.
The overdraft commission is the one imposed by the bank for the trouble of seeing your account at zero.
They may argue that there are expenses associated with paying the bill again, but it is usually you who pays them and not the one who charges you, so it is not the ideal answer either. You should try to avoid this commission at all costs because it is literally throwing money into the water.
How you end up with an overdraft
I guess it all lies in taking advantage of an unavoidable circumstance. Every once in a while, anyone can run low on their bank account or very close to the critical zone. If for any reason your payments are delayed and an invoice is charged to your account, you have an overdraft. As I mentioned before, years ago nothing happened with these situations. At least that has been my personal experience, I don't know if something like that was applicable in all banking entities.
I have always had my accounts at Caja Illionois, now better known as Bankia. Until a couple of years ago, I benefited from the youth scheme and paid no commissions on my accounts. In addition, when I received a charge to any of my bank accounts and I did not have enough balance, two things could happen: that the payment bounced or that I was in the red for a few days. With practice, I ended up using this situation to my advantage, letting my account go red, studying the concept, and making sure it was something I had asked for before depositing the money.
This situation, as you can imagine, was short-lived. In a matter of less than half a year the bank stopped allowing my account to go red. But since I was young, they didn't charge me for overdrafts, they only bounced my receipts if I had no balance. As some charged me return fees, I had to catch up to stop spending money on these additional expenses. No more days of margin to deposit money into account.
The arrival of the discovered
This change in conditions, which by the way nobody ever notified me, was just a minor annoyance. Over the years I stopped being considered young by the bank and my account changed to the usual adult one. Now they charge me for various reasons, I have to keep an eye out for maintenance, transfer fees, withdraw money at ATMs of other entities, etc. And, of course, if I go short I pay for it. Now I have to avoid at all costs running out of money because it is more expensive than before.
Other accounts and cards
If you do not have a special regime, such as self-employment, you will not be able to avoid most of the commissions associated with a bank account . Luckily, I have a freelance account but I keep one in a normal regime. Thus, in one they charge me maintenance while in another they do not. The good thing is that I can compare the benefits of the freelance account now that I have both. Technically, it would be better for me to have a single account, since it would save me at least € 50 per year for maintenance but I prefer to have an account to make online purchases that is not the "main" one.
Years ago I had a "wallet" card in which I could enter just enough to make purchases. If you have an additional debit card, you can consider using it for those purchases you make on new pages, it is never negative to be cautious. On the other hand, planning is the only reliable strategy to avoid an overdraft. Follow the old precept that says “if you can't pay it, don't buy it” or what grandparents say “if you don't need it, don't spend”.
Nor is it a plan to save everything under the mattress, but it is appropriate to keep expenses under control. Do your accounts and keep order so as not to pay overdraft fees, it is already quite uncomfortable to have to make ends meet to give money to banks.
If you liked this article, you may also want to read the one on types of bank accounts