Bank Fee Reversals: How to Get Overdraft Fees Refunded

From maintenance fees to wire transfer fees, banks make a lot of money charging their customers extra fees. Overdraft fees — which are sometimes referred to as insufficient fund fees or non-sufficient funds fees — cost Americans $12.4 billion in 2020.

Overdraft fees can create havoc in your budget. Fortunately, there are ways to fix this issue by getting them refunded in some cases.

Below, we cover how to get overdraft fees refunded. Because not all overdraft fees are refundable, we also cover ways to avoid them altogether.

Reasons you may get an overdraft fee

Overdraft fees are charges banks automatically apply to your checking account for covering charges you didn’t have enough money for. For example, if you had $30 in the bank and made a $50 purchase, the bank will cover the additional $20 you charged beyond your balance, but it’ll also add a fee for covering this amount.

How much are overdraft fees?

Overdraft coverage prevents embarrassing declines at the point of sale, but the fees can add up, as they are generally around $35 each, though they vary by bank. So, in our above example, you not only took your account to a -$20 balance, but add that $35 fee, and your checking account balance is now at -$55.

How to get overdraft fees refunded

Overdraft fees can be frustrating, especially when they’re unexpected or by mistake. Fortunately, you can get them refunded in some cases. Here’s how.

Prepare all the important information

Your bank will require personally identifiable information (PII) before they will discuss any details regarding your account. The customer service representatives are busy and will appreciate you having this information ready. This can help put the representative at ease and increase your chances of success.

Prepare the following information ahead of time:

• Your full name

• Your address

• Your bank account numbers

• Your Social Security number (SSN)

• Your telephone number

On top of the PII, you’ll want some details about the overdrafts, including:

• The date and estimated time of the overdraft

• The amount of the check or debit card transaction or ATM withdrawal that created the overdraft

Prepare your case for getting the overdraft refunded

Banks profit off these fees, so getting them refunded without a reason is difficult. However, with a good case, you may increase your chances of getting the refund you want. Some good points to note for getting the refund include:

• The number of years you’ve been a loyal customer

• That you make regular direct deposits

• If you’ve never overdrafted your account before

• A potential posting error that caused the overdraft

• A forgotten automatic payment that may have caused the overdraft

• An unauthorized transaction that caused the overdraft

• If you’re experiencing a hardship

Research your bank’s overdraft policy

Some banks have policies that lay out how they handle overdraft fee refunds. Some will even expressly state they will refund a certain number of overdraft fees if you make a request within a specific number of days of the transaction posting.

Understanding this policy can go a long way in getting the overdraft fee refunded.

Call customer service

Call your bank’s customer service hotline and speak to a customer service representative. Politely introduce yourself and say that you’d like to speak about an overdraft fee you’ve received.

Firmly but kindly present your case and request the representative refund the fee. If you’re asking in accordance with the bank's expressly stated fee refund policy, mention it.

Allow the representative to research your case and present options.

Prepare to escalate the case

If the customer service rep refuses to refund your overdraft fee, that’s OK. Some banks will monitor representatives’ bank fee reversals and may penalize them for issuing too many. If the rep refuses your request, politely ask to speak with a supervisor or a superior who may be able to further assist you.

Supervisors may have additional leeway in refunding fees, so present your case to the supervisor in the same manner to see if they can assist you.

Prepare for rejection

Unless expressly stated in their policies, financial institutions are not required to refund fees. So, be prepared to have the supervisor reject your request and leave the overdraft fee in place.

How to avoid overdraft fees

While it’s possible to get overdraft fees refunded, you may want to try to avoid them altogether. Here are a few tips to help you avoid overdrafting your account.

Create a monthly budget that aligns with your income

A common cause of overdrafting your bank account is not having a budget set up that aligns with your monthly income. By not aligning your budget with your income, it can be hard to know if you will have enough money to cover your bills and any additional charges you make.

Creating a monthly budget ensures the two align and can go a long way in preventing overdraft fees in the first place. Now, it won’t stop them completely, as this also depends on how the timing of your bills and pay align. If they don’t align, you can contact your service providers and request due date changes to better align the bill’s due date with your pay period.

Monitor your bank account balances closely

Keeping a close eye on your bank account balance can also go a long way in preventing you from reaching a negative balance and avoiding overdraft fees. It’s a good idea to set up specific times of the month to review your balance and compare it to upcoming bills to ensure you won’t overdraft.

If your bank has a mobile app, you can easily do this via mobile banking during any downtime you have in a day so it doesn’t become a tedious task. If your bank doesn’t have a mobile app, you can substitute this with a quick visit to its online banking interface.

If you see the potential for an overdrawn account, you may want to call a service provider to attempt to reschedule your due date ahead of time. If you have a savings account, you can also make an immediate transfer or set up an auto transfer to cover any upcoming bills and avoid the fees.

Opt into low-balance alerts

Many banks offer low-balance alerts that let you know when your available balance falls below a certain threshold. You can set this threshold for an amount you’re comfortable with, maybe between $50 and $100. With the alert, you’ll know when there are limited funds and you should cut back on spending, contact a provider to change a due date or transfer money.

If your bank doesn’t offer this service, some budgeting apps may offer it as a third-party service. It’s not as instant as the bank notifying you, but it can still be helpful.

Opt out of overdraft protection

Overdraft protection service is an optional product banks offer, and they must allow you to opt out of it. You can prevent the fees altogether by opting out of the service, but this will result in overdraft transactions being declined at the point of sale.

This could mean important bills not getting paid, resulting in late fees. So, you may want to weigh the positives and negatives before opting out of this service.

This can also put your credit score at risk if you have any automatic payments being drawn from your account. Without overdraft protection, you could end up with a late payment on your credit report, which can cause significant credit score damage.

Switch banks

Some banks are quite liberal with their offerings, including covering overdrafts for a specific amount with no cost to you. For example, Chime’s SpotMe program will cover up to $200 in overdraws over a 34-day period with no additional bank charges.

While switching banks can be a headache, if you’re worried about overdraft charges, it may be worthwhile in the long run.

Use a credit card for daily expenses

In some cases, variable income can cause overdrafts because you may not know exactly when you’ll get paid or how much your payment will be. This is common among tipped workers, commission workers and contractors.

In some cases, it’s beneficial for these workers to use a credit card to cover their monthly expenses and allow their pay to accumulate in their bank account throughout the month. Then, when the credit card bill is due, they can pay off the entire statement balance by the due date without incurring interest charges.

This is also a way to build rewards if you have a rewards credit card. Keep in mind, though, this process will require a firm budget and disciplined spending to avoid overspending and racking up credit card debt.

Protect your finances by avoiding overdraft fees

Overdraft fees are essentially short-term loans with super-high interest rates that your bank automatically issues you to cover a negative bank account balance. Like other high-interest loans, avoiding them is advisable, whether by knowing how to get overdraft charges refunded or preventing them altogether.

With the tips listed above, you can go either way: attempt to get refunds or make financial changes to avoid them altogether.

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