Overdraft fees can sneak up on you — one small transaction, and suddenly your bank account dips below zero. Before you know it, you’re charged a hefty fee, turning a simple coffee run into a costly mistake. Whether you’re banking in Malaysia or Singapore, avoiding overdraft charges comes down to good money habits, proactive monitoring, and the right banking tools.
Here’s a guide to help you understand what overdraft fees are and how to avoid them effectively.
What Are Overdraft Fees?
An overdraft happens when you spend more money than you have in your bank account. Some banks will cover the shortfall temporarily and charge you an overdraft fee for the convenience.
Example:
You have RM50 in your account, but you swipe your debit card for RM60. The bank allows the transaction and then charges you a fee (which can be up to RM10–RM30 in Malaysia, or SGD$20–SGD$40 in Singapore).
These fees add up quickly and can be a silent drain on your finances if you’re not paying attention.
Why Overdraft Fees Hurt Your Financial Health
- They’re expensive. A few overdraft charges per month can wipe out your budget.
- They can lead to debt. If not paid off, fees can compound or cause your account to be frozen.
- They impact your credit indirectly. If left unresolved, your bank may report your account to credit bureaus or collections.
How to Avoid Overdraft Fees
1. Track Your Account Balance Regularly
Check your account balance before making any purchases. Most banks offer mobile apps that let you view your balance and recent transactions in real time.
Tip: Use apps like MAE (Maybank), CIMB Clicks, DBS digibank, or OCBC Digital for real-time alerts and tracking.
2. Set Up Balance Alerts
Most banks in Malaysia and Singapore allow you to set up SMS or app alerts when your account balance falls below a certain amount. This gives you a heads-up before you spend more than you have.
3. Opt Out of Overdraft Protection (If It’s Optional)
Some banks automatically enroll you in overdraft protection, which allows transactions to go through even if you don’t have enough funds — at a fee.
Ask your bank if you can opt out, so that instead of processing the transaction and charging you, they simply decline it.
4. Link to a Backup Account
Consider linking your savings account or credit card to your current account. If your current account runs dry, funds will automatically transfer from the linked account.
Note: There may be a small transfer fee, but it’s usually much lower than an overdraft fee.
5. Keep a Buffer
Maintain a small “invisible buffer” in your account. For example, always act like RM100 or SGD100 is unavailable. This can prevent accidental overdrafts caused by delayed transactions or automatic debits.
6. Use Prepaid or E-Wallet Options
If you find it difficult to manage bank balances, consider using Touch ‘n Go eWallet (MY) or GrabPay/PayNow (SG). These require top-ups and won’t allow overspending, helping you avoid overdrafts entirely.
7. Know When Auto-Debits Happen
Bills and subscriptions can hit your account at awkward times. Keep a list of all auto-deductions (like Spotify, utilities, or insurance) and schedule your transfers or top-ups accordingly.
Bonus Tip: Choose Banks with No or Low Overdraft Fees
Some banks offer fee-free overdrafts up to a certain limit or offer flexible arrangements. In Malaysia, digital banks like GXBank are starting to offer more transparent fee structures. In Singapore, multiplier accounts with DBS or OCBC may give you better control over your funds.
Overdraft fees are one of the easiest ways to lose money — but they’re also one of the easiest to avoid. With a little planning and awareness, you can keep your accounts in check, avoid surprises, and maintain better control over your financial health.
