Overdraft Fees Can Be Avoided By Taking These Important Steps

Last Updated on June 9, 2021

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Overdraft fees are endlessly frustrating. However, they can be avoided by using a few simple tricks. Here’s how.

What Is An Overdraft Fee?

An overdraft fee is essentially the bank’s way of charging you for borrowed cash. When you spend more than your bank account has, the financial institution covers the excess bill, but charges you a fee in return, to be paid back within five to eight days. Without proper payment, you’ll continue to owe more money, depending on interest rates and late fees your bank charges.

You accidentally spend money you don’t have. Then you’re forced to pay even more of the money you don’t have. However, overdraft fees are a big money-maker for banks, considering big banks collect roughly $11 billion in overdraft fees each year, according to the Center for Responsible Lending.

The report also points out that only “nine perfect of account holders pay 84 percent of the billions paid annually in such fees,” and those customers “tend to carry low balances,” or an average of $350 or less. Overdraft fees are an abusive practice, especially given the targeted audience of such fees. “The median number of overdraft fees was 37, nearly $1,300 annually,” for one group studied by the Center for Responsible Lending.

Common Overdraft Fees

For most banks, there is a grace period that protects you from fees. Most banks offer a few months while you build up your account, in which case you are protected from being charged for over-drafting your account. Know how long your grace period is and ensure that you have enough money in your account when it ends.

Once that grace period is over, most banks begin charging hefty fees when you go over. For most banks, these fees are in the $30-40 range and have a due date within a week. When that week is up, interest and other fees pile up, making the situation much worse.

For Bank of America, the fee is $35.

For Chase, the fee is $34.

For PNC, the fee is $36.

These bills can be hefty, especially when you’re account balance has already hit the negatives. Though most banks have a limit on the number of overdraft fees you can be charged each day, you’ll want to deal with the issue ASAP, before things get worse. Here’s a step-by-step plan to get your overdraft fee waived.

Say Goodbye to Overdraft Fees! 

Once you realize you’ve overdrawn your account balance, check your bank account statement immediately. If you’ve been charged a fee, waste no time. Call your financial institution and get it resolved. Do not pay the bill just yet. Keep that negative balance to show the customer service representative. Hopefully, they’ll be able to remove it.

Note: Make sure to take these steps right away, to prevent any further charges to your account!

Step 1: Organize

Every good plan needs to be organized accordingly. Once you call your bank, they’ll ask specific security questions, so make sure you have all the answers.

  1. Full name on the account
  2. Account number
  3. SSN
  4. Home address listed
  5. Phone number

Once you have this info handy, get your phone ready and give your bank a call.

Step 2: Dial

Find the customer service number for your financial institution and give it a call. Calling will make it easier to be connected to various individuals if the process demands it, without having to wait in person for a supervisor or representative to become available. Also, if you’re bank is big enough, you’ll have a chance to call again and be connected to a different individual if the first wasn’t helpful.

Note: If you use a local bank or a smaller financial institution, try going in person. The personal touch could get the issue resolved faster and with less hassle. This works especially well if you’ve had personal contact with your bank before.

Step 3: Speak Up

You won’t get it if you don’t ask, so make sure to speak up. Remember, you’re their customer and have every right to make requests. They provide you a service and they want you to remain loyal to them. If they say no, you can always take your business elsewhere (once you’ve paid your fee, of course).

Speak nicely but forcefully to the customer service representative. Tell them your issue and why you happened to overcharge your account. If the individual isn’t helpful, you can always ask for a supervisor.

Step 4: Try Again

If all else fails, call again. Sometimes, service reps are having a bad day or have already issued overdraft forgiveness to several customers in a row. You can always call again and try to get a different representative to help you.

If that still doesn’t work, walk into your local branch. This may be more nerve-racking, but sometimes the personal touch is all you need.

Individual Institutions

Each bank is different, so avoiding (or waiving) your overdraft fee is going to vary. Make sure you research your specific bank and its rules on overdraft forgiveness. Some banks have safeguards in place to prevent excess withdrawal, including alert systems, or one-time forgiveness plans.

Avoid Fees In The Future

  • Disable overdraft to ensure your bank account doesn’t cover excess charges. Instead, your card will be declined upon request, and your account won’t be overcharged. You may be charged an NSF, or non-sufficient funds fee, however, this is often less expensive than an overdraft fee.
  • Connect multiple accounts. Some banks will let you connect multiple accounts, whether in-house or from other banks that will be charged if you overdraft the original. This gives you a bit of a safety net if you forgot how much was in the first account.
  • Enable alerts that will warn you when your account balance is low.
  • Keep tabs on your account so you know how much you have to spend.
  • Use a credit card instead of a debit card, and simply pay off the credit each month from your bank account. This can prevent accidental charges throughout the month (or between pay periods) that will cause an overdraft fee.
  • Keep a high balance so you don’t worry about overcharging. If you have multiple accounts, consider consolidating the funds and close out the extra accounts.

And, of course, the best way to avoid overdraft fees is to choose a bank that doesn’t have them at all!