It’s payday again and your bank account is looking a little low. You need just a few more dollars to get you through until your next paycheck. Maybe the ATM will have an answer for you… Right? Wrong! Instead of helping you, the ATM charges you an outrageous overdraft fee because apparently, it doesn’t understand that you can’t afford that right now.
An overdraft fee is charged by banks when a customer makes a transaction which exceeds the available balance in their account (this means making a purchase or withdrawal with money that isn’t there).
Continue reading this blog post to know how to fight overdraft fees when they happen again.
Don’t Automatically Opt-in to Overdraft Protection
The temptation to let overdraft protection kick in whenever there’s not enough money in your account is strong. But, as you now know, that’s a really expensive solution. The average overdraft fee is $36 — just for one instance of overdrawing your account. You could end up paying a lot more if overdraft protection triggers multiple times in one month.
If you want to avoid overdraft fees altogether, you should opt-out of overdraft protection. This way, the transaction won’t go through if you try to make a purchase and don’t have enough money in your account to cover it.
Find an Account With No or Low Overdraft Fees
Some banks offer accounts that don’t charge overdraft fees, but you must search for them. While most banks will list their overdraft policies on their website, some won’t. You should call the bank directly if you’re looking at a bank’s website and don’t see information about overdraft fees.
If you’re shopping around for a new bank and want to fight overdraft fees, look for accounts that don’t charge them. Visit their website to look for this information. If you don’t find it, then feel free to call the bank directly.
Use Tools to Track Your Balance and Avoid Surprises
To avoid overdraft fees, you’ll have to be on top of your account balances and spending habits. Fortunately, there are several apps and tools you can link your bank account to and track your spending. Some of them will even send you alerts when your balance is getting low.
For example, the Digit app monitors your account and predicts when you’ll have a shortfall. When it notices that you’re spending more money than what’s in your account, it transfers money from your savings account to your checking account.
Negotiate a Lower Fee or Find a Bank That Doesn’t Charge Them
If you’re already paying overdraft fees and want to try and get a lower or no fee, or if you want to ask a bank not to charge you overdraft fees, you can try to negotiate a lower or no fee. All you have to do is call your bank and ask to speak to a manager. You can also try writing a letter and asking for a lower or no fee.
The Bottom Line
The Consumer Financial Protection Bureau (CFPB) has spent the last few years cracking down on banks with unfair overdraft fee practices. As a result, many banks have since stopped offering checking accounts with overdraft fees or changed their policies.
Unfortunately, some big banks are still charging costly overdraft fees on checking accounts — and it’s something you should be aware of before opening a new bank account anytime soon.
If you’re not careful, banks can still get you to pay an unnecessary fee when you don’t have enough money in your account.
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