When to Link Chequeing and Savings Accounts
Have you ever had an overdraft cheque? It can be a major
inconvenience, especially if the overdraft was only by a small
amount. To help consumers to avoid the problem of minor
overdrafts, a number of banks offer a link between chequeing
accounts and savings accounts... this allows the cheque to be
processed using additional funds provided by your savings
account.
A standard overdraft fee is still charged, but the chequeing
account that the cheque was written on doesn't drop down into a
negative balance and you aren't charged returned cheque fees
from the business or individual to whom the cheque was written.
If you think that linking your chequeing and savings accounts
might be beneficial to you, then read on for more information.
Linking Your Accounts
Linking your chequeing account to your savings account requires
that you contact your bank and request that they make the link
between the two. There may be a service fee involved, though
many banks offer account linking without a fee. In order to find
out the specifics of any account linking that your bank might
offer, you should visit their website or inquire directly from
one of the tellers or customer service representatives at your
local bank branch.
Limitations of Account Links
Of course, linking your chequeing and savings does have its
limitations. Obviously, you aren't able to have overdraft
protection that exceeds the amount of money that is in your
savings account. There may also be additional limits imposed by
the bank in regards to the amount that is covered in the
overdraft protection... this can vary from bank to bank, and you
should make sure of exactly how much coverage you have before
assuming that you have certain amounts of overdraft protection.
Deciding Whether to Link Your Accounts
You should keep in mind that linking your chequeing and savings
accounts might not be the best course of action for you,
depending upon your particular circumstances. If you have your
savings set aside for a specific purpose or have regular
scheduled withdrawals that are deducted from your savings
account balance (such as loan payments or automated
investments), you might want to reconsider linking your savings
and chequeing accounts in order to avoid an overdraft reducing
your savings account balance below the amount of the scheduled
withdrawal. You might also have other reasons to avoid linking
the two accounts.
On the other hand, if you're wanting to make sure that you don't
get into financial trouble with your chequeing overdrafts or if
you tend to run very close to using up the amount in your
chequeing account often, you might want to consider linking the
two accounts in order to help avoid returned cheques and
additional fines.
What to Do if Account Links Aren't Offered
Though account linkage is growing in popularity, not all banks
offer linked savings and chequeing accounts as a means of
overdraft protection. If this is the case at your bank, you can
either start to divert some of your savings funds into your
chequeing account in order to build up a buffer of additional
funds to help avoid overdrafts, or you might consider looking
into accounts at another bank that does offer linked accounts
for overdraft protection.
It's important that you consider the service and other features
that your current bank offers before simply closing your
accounts in favor of new ones, but if you are able to get the
same level of service with additional features that you want
somewhere else it's at least worth looking into.
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