How an overdraft happens
The balance on your screen is not always the money available. Pending card charges, a check nobody has cashed yet and tomorrow's automatic payment all sit between the two figures. Gas pumps and hotels also place holds that can exceed $100 and last for days. The traditional overdraft fee was about $35 per item, with several possible in a day. Many large banks have since cut or dropped it, and some now allow until the end of the next business day to cover the shortfall, so read your own bank's current fee schedule.
The opt-in rule
Under federal rules, a bank may charge an overdraft fee on an ATM withdrawal or a one-time debit card purchase only if you have opted in. Without the opt-in, the card is declined at no cost. Check the setting in your bank's app, and know that you may revoke it at any time.
The rule does not reach checks or recurring automatic payments. The bank may pay those and charge a fee, or return them unpaid, in which case the biller often adds a returned-payment fee of its own. Three defenses work here. Link a savings account so that a shortfall is covered by a transfer, set a low-balance alert at $100 or so, and keep a standing cushion.
The other fees
- Monthly maintenance fees of $5 to $15 are waived with direct deposit or a minimum balance, and plenty of online banks and credit unions charge none.
- An out-of-network ATM bills you twice, once by the machine's owner and once by your bank, often $4 to $6 in total. Cash back with a debit purchase at a grocery register is free.
- Foreign transaction fees add about 3 percent to purchases abroad and from overseas merchants.
- Paper statements cost a few dollars a month at some banks, and electronic delivery removes the charge.
- An outgoing domestic wire runs $15 to $30, while an ordinary electronic transfer is free when speed is not essential.
Getting a fee refunded
Call or use the bank's chat, say how long you have been a customer and that the fee is a first or a rare one, and ask plainly for a courtesy waiver. A first request usually succeeds. If the fees keep coming, move to one of the many accounts that charge no overdraft fees at all.
Tip Search twelve months of statements for the word fee and add up what you find. The total tells you whether your checking account is free or merely advertised that way.
