May 21, 2019

When your balance is low and you’re in urgent need for cash, it’s as if your survival mode kicks in, and you start frantically looking for the easiest and fastest way to get the money you need. This may mean turning to a friend, family member, or your bank for money. If you go with the latter option, it will most likely come with a fee, and usually, it’s a big one.

Overdraft fees and NSF fees are some of the worst kinds of fees. For those of you who already have experience with them, you know how quickly overdraft protection can turn from helpful to predatory.

How does overdraft protection work?

How overdraft protection works depends on your bank, but the premise is the same. If you opt into overdraft protection, your bank will cover the transaction with a linked backup source – a line of credit, savings account, or credit card. If you don’t link an account, your bank may cover the payment. However, your bank will make you pay back the overdraft amount, and charge you an overdraft fee for it. Overdraft protection can be convenient for many reasons. You can still cash out at an ATM. Your debit card will still go through and you may no longer have bounced checks. However, fees can start to add up quickly, and overdraft protection may start hurting you more than it’s helping.

For those of you who don’t have experience with overdraft fees, you may be familiar with other types of fees like ATM and monthly maintenance fees. Was there ever a time when you were looking through your bank transactions only to find an ATM charge of $2.50? Or maybe, you noticed you didn’t meet your bank’s minimum monthly checking account balance one month, and as a result, were charged a $12 fee. Although these types of fees are less than an overdraft fee or an NSF fee, they can all begin to add up. We’ve put together a list of actions you can take to reduce your bank fees starting today.

Here are 5 things you can do to limit bank fees:

1. Turn off the overdraft protection service on your bank account

It’s possible you might not even remember opting into this service when you first opened your checking account. In fact, 52% of people who have overdrafted in 2014 don’t remember opting into their overdraft protection service. You might be wondering, “how many times can you overdraft your account? Is there a limit?” The answer is that it depends on your bank. For Wells Fargo, they can charge you an overdraft fee of $35, up to 3 times per day! If you’re unsure if you’ve been opted-in for this service, or you are currently signed up and no longer wish to be, contact your bank today to opt-out.

2. Call your bank to get your bank fees refunded

Did you know you could get your fees reversed? If you’re a customer in good standing with your bank, they won’t want to lose your business. Call them and be polite, but firm. Ask open-ended questions like, “How can you help me with these fees?” There is a good likelihood that they will offer to refund some of your fees. Additionally, if you’re interested in learning more about your bank’s overdraft protection policy, you can also ask them questions like, ‘how does overdraft protection work?’, how much do you charge for an overdraft/NSF fee?” Getting answers to questions like these can help you make informed decisions about your finances and bank account(s).


3. Turn Off Automatic Payments

In general, it’s easy to forget about subscriptions and recurring payments that are automatically set to be paid, including your utilities, cable, Netflix subscription, etc.  Forcing yourself to pay these bills manually makes it easier to keep track of your budget. It may also prevent you from accidentally overdrafting.

4. Set Up Direct Deposit

Having your paycheck automatically deposited into your bank account ensures that funds will get into your account a lot faster than waiting for a paper check to come in the mail. This can help you also avoid overdraft fees.

5. Get a service that protects you from a low balance and overdraft penalties

Some responsible installment loans can help you budget better. You can also try out, Brigit, an app that offers budgeting features, tailored financial advice and, if you need it, can send you up to $250 to protect your balance from dipping below $0. Either way, both these options are surely better than being charged bank fees!