Once in a while, we find ourselves making purchases that exceed our account balance. Whether this was intentional or not, your bank will process an extra fee and add it to the initial debt you owe for over-withdrawing. These charges will apply each time you make a purchase with a negative balance, leaving you with extra dollars to shell out.
If this happened because you were unaware of your balance or the deposit you thought would cover hasn’t been processed, don’t fret. Below are the best ways to avoid overdraft fees and how to get a waiver.
What Is an Overdraft?
The term overdraft refers to a situation whereby a customer’s cash transaction is cleared despite having an account with insufficient funds. For example, if you make a $50 transaction with $40 in your account, the extra dollars get filed as an overdraft.
During an overdraft, your financial institution allows you to complete your purchase even when you can’t afford it. However, this is not totally out of the kindness in their heart. Each time this happens, you will be charged overdraft fees that you must pay.
Plus, your balance will read negative until you catch up on the extras with a sufficient deposit to clear the overdraft fees. However, if you need urgent cash and don’t want it used to clear your fees, you can get a payday loan without a bank account.
How Much Is Charged as an Overdraft Fee?
The amount you need to pay after an overdraft depends on your bank. The average is usually $33 per overdraft, but some charge up to $39. If you continue using your account for payments after it hits negative, you will end up with endless overdraft fees you have no choice but to pay.
How To Avoid Overdraft Fees
1. Unsubscribe to Overdraft Coverage
Your financial institution will process withdrawals and leave you with a negative balance or reject them. But the ball is only partially in their court. You can choose to have no interest in their overdraft programs and forego coverages on your extra ATM transactions, which will stop the associated overdraft charges.
Overdrafts occur more on transactions involving debit cards compared to others. Once stopped, your purchases won’t be completed if your balance can’t cover them. And, of course, there’s no charge for attempting transactions on cards low on funds.
2. Always Be Informed of Your Account Balance
Make a habit of regularly checking your account balance so you won’t be caught with an overdraft fee by surprise. You can also consider confirming how much funds you have before buying any item. This can be done quickly using your bank app. You don’t want to end up with $33 extra on a purchase of less than $25. If you have accumulated debt, there are ways to generate income and prevent future overdrafts.
3. Arrange for Notifications When Low on Cash
You can set up notifications in case of a low balance to keep you in check. The process is automated; you just need to see if it’s a service your financial institution provides. You can opt for SMS, email, or any form of alert to keep you informed whenever your balance exceeds the agreed minimum.
4. Fix an Overdraft Issue By Making a Quick Deposit
Some financial institutions give their customers the grace of a few hours or more to correct an overdraft before processing extra charges. Confirm if your bank works by this policy. If so, remember to transfer money to your account as soon as you get caught in this costly circumstance.
If your bank doesn’t offer a deadline or you can’t afford it, you should still make a quick deposit. It will prevent other applicable charges, as your overdraft fees might be extended if you don’t move your balance to the positive side within a few days.
5. Link Your Checking Account
You can prevent overdrafts with a protection program offered by most financial providers. You can connect a different account (savings or otherwise) to your checking account if you inform your bank of this choice. If you make a transaction on an account with insufficient funds, the available cash in the linked account will make up for it.
This service is offered at a cost; however, it is less compared to overdraft fees. All you need to tender is a transfer fee if the linked account is a regular account. For credit cards, you will be charged the agreed interest on the shortfall.
Steps To Waive Overdraft Fees
Depending on the circumstances, it is possible to have your overdraft charges waived. There’s no guarantee of success, but it is worth trying.
- Contact Your Bank
It could help if you call your provider immediately after you notice an overdraft fee. Contact details are usually on your card to reach customer service and ask for help.
- Explain Your Situation
When you get in contact with a representative, explain the reasons for the overdraft and be as straightforward as possible. Giving invalid excuses or beating around the bush might yield no result. If it’s a temporary financial issue, let them know.
- Pick the Nearest Date for a Deposit
While asking to have your fees waived, remember to promise a cash transfer within a short period.
- Refer to Your Customer History
If this is your first overdraft, ask them to refer to your history and confirm how unusual it is. This might help them reconsider.
If you fear the charges associated with an overdraft, you now know how to avoid them. You can also fix a low balance by taking a quick cash advance from MoneyZap. You will have access to loans with reasonable interest and a flexible repayment plan.