Overdraft fees are a financial and emotional burden when you’re already struggling financially. Overdraft fees are annoying even when you’re not in a difficult situation.
According to a 2020 study by research firm Oliver Wyman, frequent overdrafters average around 11 overdraft or insufficient funds fees (NSF). Frequent Overdrafters Average around 11 overdraft fees or insufficient fund fees (NSF), says a 2020 research study by Oliver Wyman. These fees bring in $17 billion for banks each year.
There are ways to avoid overdraft charges, particularly if you do not regularly overspend on your checking account. You may be able avoid overdraft charges in the future if you understand when banks charge these fees. Knowing how to communicate with your bank on the rare occasions that you go over budget can help reduce or eliminate overdraft charges.
What are Overdraft Charges?
When your bank pays for a purchase even though there is not enough money on your account to cover it, they charge you an Overdraft Fee. You can overdraw your account if you write checks or swipe your debit cards for amounts greater than what you have in your checking. Multiple transactions hitting your account at the same time can put you in danger of multiple overdrafts.
Note:
According to the Consumer Financial Protection Bureau, the median overdraft charge of the top 50 banks ranked by market share is 34 dollars. 2
The bank may charge a fee for non-sufficient or insufficient fund instead of paying the overdraft and covering the purchase.
How do Overdraft Charges Work?
Overdraft fees are expensive. They can cost as much as $40 per instance, depending on the bank. It doesn’t need to be a shock. You can enroll with some banks to receive alerts via text, email or mobile notifications if you have an overdrawn account. If you check your online transaction history or read your billing statement, you may notice the overdraft fee. You may be able to see the transaction which triggered the fee in your online account.
Overdraft fees can be charged per transaction. This means that your bank may charge you multiple fees if several transactions are posted to your account on the same date. Overdraft fees can cost you up to $200 depending on your bank.
Note:
You may be able to limit the amount of fees that you are charged for overdrafts in a day. This will prevent you from paying excessive amounts of fees.
Bank Overdraft Charges
Overdraft fees are charged by most banks, big and small. The amount and number of fees per day vary.
| Bank | Overdraft Fee | Maximum Fees per Day |
| Ally Bank | $0 | N/A |
| Bank of America | Spend more than $1 to get $35 | 4 |
| Capital One | $0 | N/A |
| Chase | $34 | 3 |
| Citi | $34 | 4 |
| Citizens Bank | The fifth, eighth and eleventh days that an account is overdrawn will incur a fee of $37 and a further $30. | 5 |
| Truist | $36 | 6 |
How to Get Refunds on Overdraft Fees
You may be able get your overdraft fee refunded in a few simple steps, as long as it’s not a repeated offense.
Call Your Bank
Call your bank as soon as you see an overdraft charge. The number can be found on the back or website of your bank or mobile app.
You Can Make A Request
You can tell the bank that you would like the fee to be waived. You could say, “I was charged an overdraft on [date]; I would like it removed.”
You may want to tell the bank what caused the overdraft. You may have experienced financial hardship, for example, because your pay was late, a bill processed earlier than expected or you were delayed in receiving your paycheck.
You can use your bank history
Bring this up if you have been a loyal bank customer who has avoided overdraft charges. You can say something like, “I have been a loyal customer for many years, and I don’t overdraw often.” Can you do anything?
Be Polite
You’re asking for a favor from the bank. A little politeness goes a long ways. Even if the customer representative is not willing to waive the fee, don’t get angry.
How to avoid Overdraft Fees
If you have a history of overspending, your bank may not be as willing to waive the overdraft fees. You can prevent overdraft transactions and save yourself hundreds in fees.
- Transfer or deposit funds before the deadline: By ensuring that you have enough money in your account to cover all pending transactions, you can avoid overdrawing.
- Find a bank which does not charge fees for overdrafts: The bank may still process the overdraft transaction but will not charge you any fee.
- Sign-up for Bank Balance Alerts. These alerts will notify you when your account balance falls below a specific amount. This can help you to know if you need make a deposit by the deposit deadline.
- Register for Overdraft Protection. This feature transfers funds from a linked credit card or bank account to prevent an overdraft. Overdraft protection is still charged by some banks, but it’s usually lower than the overdraft fees.
Note:
Overdraft transfers made with a credit card can be treated as cash advances, resulting in a fee for the cash advance and a higher rate of interest than you’d pay on purchases. Cash advance transactions do not have a grace-period to avoid finance charges. Interest starts the day of the transaction.
FAQs (Frequently Asked Questions)
How many times can a bank reverse a fee for an overdraft?
Banks can waive overdraft charges at their discretion. Overdraft fees are not guaranteed to be refunded.
Overdraft charges: When do they apply?
Overdraft fees apply when your bank covers a transaction for you because your account balance does not cover it. Some banks will not charge you the fee until after the close of business or the following morning. This gives you the opportunity to deposit cash to cover your overdraft.
Which bank charges the lowest fees for overdrafts?
Ally Bank does not charge an overdraft fee for debit card transactions. Chime, an online banking platform, doesn’t charge overdraft fees if your account is overdrawn up to $200.
