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.