Bank Transaction Fees

6 Ways to Avoid Being Charged Overdraft Fees

A transaction that brings your bank account balance below zero is known as an overdraft. When this occurs, your bank or credit union will charge you an overdraft fee.  However, its not that hard to avoid overdraft fees.

Unfortunately, overdraft fees are a common expense consumers face. In fact, Americans spent $34.3 billion in overdraft fees in 2017. Overdraft fees are not getting any cheaper either. Since 2000 the average overdraft fee went from $18 to $30.

The good news is that most overdraft fees can be prevented.

6 ways to avoid overdraft fees

Below are six tips to help you avoid unnecessary overdraft fees. Of course, the best way to avoid overdraft fees is to choose a bank that doesn’t charge them, such as Chime.

1. Opt out of overdraft protection

Overdraft protection is a service in which a bank will allow you to withdraw money and pay for your transactions when you lack funds in your account. Most banks will charge an overdraft fee every time you use this service.

If you opt out of overdraft protection, you will not be able to withdraw money and your debit card will get declined every time you exceed your balance.

While it may be embarrassing to have your card declined, it’s better than being left with costly overdraft fees.

Some banks offer a priority checking account. They’ll automatically transfer money from your savings to your checking account so that you can avoid overdraft fees”

2. Check your account balances frequently

Get into the habit of checking your accounts on a daily or weekly basis to ensure your balances aren’t too low. You can check your balances online, through a mobile app, by phone, or in person at your local bank.

3. Sign up for low balance alerts

Low balance alerts can inform you when you’re at risk of overdrawing your account. You can set a certain threshold and get notified via email or text every time your account dips below it.

4. Link to a savings account 

“Some banks offer a priority checking account. They’ll automatically transfer money from your savings to your checking account so that you can avoid overdraft fees,” Explains Karen Ford, financial coach and owner of KBF Management Company. While you may be charged a transfer fee, it will be far lower than an overdraft fee.

5. Use prepaid debit cards

Prepaid debit cards may be a good option if you continue having issues with overdrawing your checking account. The card will allow you to deposit, withdraw, and spend money without worrying about overdraft fees.

6. Find a bank that does not charge overdraft fees

While many banks charge overdraft fees, some charge far lower fees or none at all. Consider shopping around until you find a bank that has an overdraft fee policy you are comfortable with.

The cost of overdraft fees

Overdraft fees vary from bank to bank. However, the most common overdraft fee is $35. Check out the chart below to learn about the overdraft fees at popular banks. Note that these fees could change at any time. Visit the link on the left for the most current information.

BankOverdraft Fee (Per Item)Maximum Fees Per DayTotal Possible Cost in a Day
Ally Bank$251$25
Bank of America$354$140
Fifth Third Bank$375$185
KeyBankUp to $395Up to $195
PNC Bank$364$144
U.S. Bank$364$144
Wells Fargo$353$105

How to get your overdraft fee waived

Fortunately, most banks realize that consumers are forgetful at times and may waive overdraft fees as a result. If you’d like to get your overdraft fee waived, call up your bank and adhere to these tips.

Be polite

When you call your bank to try to get your overdraft fee waived, it’s essential to be polite. If you speak to the bank representative nicely, they’ll be more inclined to waive your fee.

Ask for the fee to be waived

Inform the bank representative that you noticed an overdraft fee and are hoping to get it waived. If the representative does not agree to waive it right away, move on to the next tip.

Mention your history

Tell the bank representative that you’ve been a loyal customer and simply made a mistake. Remember, the bank would rather keep you as a customer than lose you because of an overdraft fee.

Try a different representative

If you aren’t having any luck with the bank representative you’re speaking to, ask for the manager or call the bank back and speak to another representative. Some representatives may be more lenient than others.

Visit the bank in person

Visit the bank in person if your fee isn’t getting waived on the phone. It’s more difficult for a bank representative to say no to your face.

Compare checking accounts

Overdraft fees can be frustrating and expensive. The tips above can help you avoid these fees and get them waived when necessary. But the first step is to find the best bank account for your situation.

Review and compare checking accounts side-by-side to find the right one for you.