Anybody can miss a payment from time to time. But how is it fair to miss by a few dollars and get charged $35? Whether it was your fault or not, there’s a way to get overdraft fees refunded.
- Why Do Banks Charge Overdraft Fees?
- How To Refund Overdraft Fees?
- How To Avoid Overdraft Fees?
- Before You Go For A Refund…
Why Do Banks Charge Overdraft Fees?
If one day, you find your balance below zero, it’s because you’ve allowed your banks to do so. You may not remember doing this, because overdraft features are enabled by default when creating a bank account.
Why? Because banks make money from lending money.
Banks want you to use their money. If you miss a payment, that will lower your credit score, which reduces the amount of money you can borrow from them. Overdraft services prevent you from missing payments for a ~$35 fee.
Whether you need it or not, banks prefer you don’t know about it. Nobody is going to say that you can opt-out of the service. Because you can’t just sell “overdraft services.” It’s more effective to keep it by default to reduce cancellations.
Because of this, most bank employees are flexible with overdraft fees. It’s easy to refund it when you position yourself as a valuable client.
How Do Overdraft Fees Work?
Suppose you have $100 in your balance and you make a greater purchase. Typically, you’ll get a warning on your phone and email. You’re $25 in the red and need to pay it off quickly to prevent overdraft fees.
Most banks won’t charge anything until 24 hours pass without solving the problem. If you owe less than $5, nothing may happen. But in the case of $25, you’re charged $30-$35 per DAY.
3 Days with an overdraft account cost you $90 to $105. And it’s possible that your bank charges $35 for every additional purchase until your balance is back above zero.
If you want to dispute a charge, you have the highest chance to refund it in the first 24 hours.
Thankfully, overdrafts have their limits. You can only overdraft so many times, and the overdraft fees rarely exceed $500. However, you should treat this service as an emergency tool, not free credit.
Too many overdrafts can lead to the suspension of your account without warning nor explanation.
How To Refund Overdraft Fees?
If you want to refund overdraft fees, you’ll need to request your bank to remove them. There’s no other way, as you’re not supposed to undo those changes.
Does it work every time? No. But it’s the best-known way to remove charges from your account. For example, you could address other fees (monthly maintenance, payment rejected, out-of-network ATM, late fees…), saving $100-$300 in a 30-minute call.
If that sounds worthwhile, here’s what to know when contacting your bank:
#1 You Only Need One Yes
Calling customer support isn’t that different from selling on the phone. Many people won’t respond the way you need, but there’s always someone who gets it right. Just because an employee says they can’t fix the issue, that doesn’t mean it’s true.
You can ask to talk to the manager, who’ll tell you something different. You can go to the office yourself and get their attention. You can keep calling until you find the right agent.
Especially with large companies, many support agents don’t help you because they don’t know-how. Maybe they’re tired, and it’s easier to pretend they don’t know, or they will “investigate the case.” Find someone who cares.
Form communication can be slow. Ideally, the business has a free-toll phone number, or they call you instead. Be both simple and specific when describing your problem, so you can find the right agent sooner.
#2 Take Action Fast
Nobody wants junk fees. But the faster you take action on a problem, the easier it is to fix. As soon as you find out the charge, use other accounts to fix your overdraft account.
Immediately contact support and request a fee refund. If you call them within 24h, or you fixed your balance already, there should be no problem canceling it.
A different scenario would be spending overdraft for one week straight, which is ($35*7) $245. When you request a refund, they may ask why you stayed below $0 for so long. And the bigger the fee is, the less likely they are to refund it.
Still, you can ask for a partial refund.
#3 Get A Small Line Of Credit
Overdrafts involve lending money between you and the bank. So instead of paying overdraft fees, it’s preferable to borrow money directly and use it instead.
Managers may not allow employees to refund fees. After all, there’s a reason for the charge, and banks make money. You could request opening a small line of credit if they can refund the fee.
The negotiation is:
a. Not refunding the fee and keeping that profit
b. Refunding the fee and earning interest from a loan
When you present this win-win scenario to an agent, they’re more likely to give what you want. And if you had overdraft issues, chances are you need a small loan.
#4 Highlight Your Value As A Customer
Banks want money. Truth, fairness and other values aren’t as important.
Suppose you request an overdraft fee refund. It was clearly your mistake. But as a valuable customer, they want to keep you for as long as possible, so they treat you better.
Here’s what “valuable” means:
- I borrow a lot of money often and always paid it back early
- I’ve been working with this bank for 3+ years
- Everybody in the local branch knows me
- I rarely ask for fee refunds
- I have a great credit score
- I never had overdraft issues before
- I own a premium account
If it doesn’t work out, maybe you need to escalate, talk to someone who thinks like a business owner.
You don’t need to talk about why they charged you the fee unless they ask. It’s worth mentioning you find the charge unfair, as you had overdraft features on by default and nobody told you about it.
Luckily for you, you can cancel all fees if you close your bank account the same year you opened it. Bankers don’t want to lose customers, so if you can’t refund $100+ in fees, consider requesting account suspension.
Try canceling any subscriptions you have (besides banking). They will probably give you a better secret offer to make sure you stay.
#5 Be Reasonable
Banks want to work with responsible customers. How can you expect them to help you if, every month, you come to dispute your fees? If you repeatedly make problems, people are less likely to help you.
Especially when refunds depend on the agent’s goodwill. Kindness can go a long way, but only so far.
If your problems happen to show up all at once, it can be overwhelming to deal with them. Don’t just throw it all at your agent, and neither create one separate case for each problem.
Instead, reduce complexity by showing one problem at a time.
#6 Keep Requests SIMPLE
First, pick which one of your problems is easier to explain and solve. Call customer support until you find someone willing to help. And if they fix the issue quickly, chances are they can fix everything else.
When the agent finishes and asks “Is there anything else I can help you with?” that’s when you introduce your next problem. You do this until you cover everything.
There are two mistakes customers make that get in the way of solving problems:
- You make it too specific
The agent needs to know, in a few words, what your problem is and what you want them to do. Don’t get into the why, when, who, or how, because that only confuses them more. If you don’t want them to “investigate the case” for three weeks, make your problem easy to understand.
See what they can do with the basic information. If they can’t do anything or need more information, then you should expand.
2. You keep making closed questions
If you compare Yes/No questions to open questions, it’s a completely different conversation. Only the second one can solve your problem because it encourages thinking. Professionals make the questions.
“Can you help me refund overdraft fees?“
When making these questions, employees reference the rule book.
“Sorry, it’s against our terms of service.”
When you make open questions, they follow up with more questions and give you a personalized answer:
- “What can we do about those fees? How can you help me with this issue?”
- “Well, let me have a look. What were your account credentials? “
How To Avoid Overdraft Fees?
You may be lucky enough to refund fees this time. That doesn’t mean it will always be that way. Consider taking measures, as it’s easy to overdraft:
- e.g., You accounted for just enough balance, but the latest purchase had unexpected fees
- e.g., Your balance is low and you forgot you had automated payments scheduled
- e.g., Someone steals your cards and overspends (maybe check fraud)
As long as you don’t owe anything, you should be able to disable it within 24h.
#1 Opt-Out From Overdraft Services
Overdrafts aren’t mandatory for bank accounts, but they’re always enabled by default. Even if you never had these issues, your account probably has it. You can turn it off to avoid surprise fees.
Whether you should or not depends: Do you prefer getting in debt or getting declined payments? Most banks won’t charge fees for failed transactions (e.g., debit cards), except for bounced checks.
To be sure, turn it off on every account you have.
#2 Turn On Banking Notifications
Automatic payments are the most common overdraft reason. You won’t know your balance is negative unless you see the notification on your phone. When working with multiple banks, it’s a must.
#3 Increase Your “Buffer Balance”
Some people don’t worry until their balance hits $0. There could be $3 and everything is still fine for them. They neither care about having $0 for monthly expenses, as there’s still enough time to earn it.
This careless mentality is what leads to overdrafts and late fees. Instead, assume you’ll need more money than you need, sooner than expected.
The easiest fix is to send money from other accounts:
- Define your buffer balance (e.g.,$200). Buffering is an emergency strategy to win time and react to mistakes
- Make it your priority to reach this minimum amount on all your active accounts. If you have, say, $2000 in another one, you can transfer some to others
- Recover this security balance after paying for unexpected expenses
Before You Go For A Refund…
Overdraft services help you keep up with payments. But if you’re going to keep it, at least get an overdraft protection service. They charge $10-$15 to prevent $35 overdraft fees, which is cost-effective.
It’s easy to get overdraft fees refunded, but it requires some persistence. You may not get it on the first call and need to wait for hours. Maybe you need to visit the bank and stand in long queues.
All for a refund with no guarantee of success.
That’s when you need to ask yourself: Is it worth my time to dispute a refund?
If they owe you $100s in fees, it’s worth a shot. But if it’s just $35, you could work on your career and earn that in an hour. The time it takes you to refund may be worth more than $35, which defeats the purpose.
If you got charged within 24h, you should contact support and take 30-60min to fix it. If it’s gonna take longer, consider whether it’s worth your time.