From texting to switching, steps you can take to avoid charges

MANAGE YOUR ACCOUNT

If you are regularly close to your overdraft limit, review when payments go in and out of your account. It may be that by moving the date of regular direct debits or standing orders – so that they leave the account just after payday rather than later – you can budget more effectively.

EXTEND YOUR OVERDRAFT

Speak to your bank if you are struggling to keep within your overdraft. You could extend it to give yourself more breathing space and most banks will not charge a set-up fee for doing this. This is preferable to paying charges for unauthorised borrowing.

SIGN UP TO MOBILE PHONE BANKING

Banks will send a text to customers when they are approaching their overdraft limit, or give a warning that they need to put their account back in the black. Gareth Shaw, money expert at Which?, says: ‘With mobile banking the management of your account is at your fingertips and you can react at short notice.’

APPEAL ONE-OFF CHARGES

If you slip into an unauthorised overdraft by mistake – for example, you were expecting a payment that did not arrive on time – contact your bank and ask for any charges to be waived. Many banks often take a commonsense approach and if you have always operated your account sensibly it should be willing to remove penalty fees.

SWITCH BANK

Provided you have managed your account well, you should be able to move. Shaw at Which? says: ‘If you rely on an overdraft, you may be able to cut costs by picking a bank with lower charges.’

TRANSFER THE DEBT

Those struggling to reduce an overdraft should consider other options. Some interestfree credit cards allow you to transfer an overdraft balance. A personal loan could also prove cheaper.