How to get overdraft fees refunded

An overdraft fee is a penalty your bank imposes when it approves a transaction involving more money than you have in your checking account. You can overdraw your account using a check, a debit card, or a transfer — and the more methods you use to withdraw cash from your account, the easier it can be to lose track of how much is in it. 

Some banks charge a one-time overdraft fee when the transaction goes through; others will continuously add a new overdraft fee every day until you resolve the issue. It’s possible to be charged more than one overdraft fee in a day if you make multiple transactions after going into the red. These penalties are automatically withdrawn from your account and can add up quickly if you don’t address them right away.

In certain situations, banks will give you a small grace window before charging an overdraft fee. For example, if you only overdraw your account by less than $5 you may get an alert but you won’t be charged a fee. 

Some banks impose a nonsufficient funds fee (NSF) instead of an overdraft fee. If the bank goes this route, it rejects the check. NSFs usually cost about the same as an overdraft fee. However, the business to which you owed money might also charge a returned-check fee, ultimately making the NSF more expensive.

Though the amount of the penalty varies by bank, the average overdraft fee is $35, according to the Federal Deposit Insurance Corp. If you’ve been hit with either an overdraft fee or NSF in the past year, you’re certainly not alone: Financial institutions collected $5.8 billion from overdraft fees and NSFs combined during the first three quarters of 2022, according to the Consumer Financial Protection Bureau (CFPB). 

The following list, using data from the CFPB, gives you an idea of how much the top 20 banks charge for their overdraft fees or NSFs, as of December 2022:

• Wells Fargo overdraft fee: $35

• Chase Bank overdraft fee: $34

• Bank of America overdraft fee: $10

• TD Bank overdraft fee: $35

• Truist Bank overdraft fee: $36

• U.S. Bank overdraft fee: $36

• Regions Bank overdraft fee: $36

• PNC Bank overdraft fee: $36

• USAA Federal Savings Bank overdraft fee: $0

• Huntington National Bank overdraft fee and/or nonsufficient funds fee: $15

• Citizens Bank overdraft fee: $35

• Woodforest National Bank overdraft fee: $32

• KeyBank overdraft fee: $20

• First National Bank Texas DBA First Convenience Bank overdraft fee and/or nonsufficient funds fee: $34

• Fifth Third Bank overdraft fee: $37

• Citibank overdraft fee: $0

• Manufacturers and Traders Trust Company overdraft fee: $15

• Capital One overdraft fee: $0

• Arvest Bank overdraft fee: $15

• Green Dot Bank overdraft fee: $15

Of the 20 largest banks in the U.S., there are three that charge neither overdraft fees nor NSFs. Those three banks are:

• USAA Federal Savings Bank: You must be a United Services Auto Association member to bank with USAA Federal Savings Bank. Membership is open to U.S. military members, as well as their spouses and children.

• Citibank: Citibank, the fourth-largest bank in the U.S., eliminated overdraft fees and NSFs in 2022. However, it still provides overdraft protection if you spend more than you have in your checking account. 

• Capital One: Capital One, the sixth-largest bank in the U.S., ditched overdraft fees and NSFs in 2021. It also still provides overdraft protection.

OK, so the train has left the station and your checking account balance is below zero. Now what? Fortunately there are some circumstances in which you can get the overdraft fee waived from your account. 

The simplest way to wipe out the fee is to ask. You can do it in person at the bank, over the phone, via email or your online account’s message portal, or through a live chat — whatever method is most comfortable for you. If this is the first time it’s happened, there’s a good chance the bank will refund the fee. But even if it’s not the first time, the bank will likely refund the fee as long as you don’t habitually overdraw your account.

Here are a few tips for the conversation:

• Be polite: Remember the person who you’re speaking with had nothing to do with imposing the fee. They’re much more likely to return kindness with kindness and waive the fee if you’re nice to them.

• Explain the situation: Say you have a new baby at home and you’re so busy you lost track of the balance in your account. Or perhaps the payment on your electric bill cleared earlier than you expected this month. Mention anything that contributed to the overdraft. Customer service agents are human, after all, and it doesn’t hurt to make the case for why it happened.

• Emphasize what a good customer you are: If you’ve been banking with the same institution for years, tell that to the customer service agent. And if it’s the first time this has happened, trumpet your solid track record up until this point. 

• Ask to speak to the manager — nicely, and only if needed: Occasionally a customer service agent may say that they don’t have the authority to waive the fee. In that case, it’s OK to escalate the situation to a manager who does have that power, but make sure you’re polite when you ask.

If you try all of these tactics and the bank still won’t refund your fee, consider switching banks. More and more banks are feeling pressure to eliminate overdraft fees, so there’s a good chance you can find one that fits your needs without the extra pain. Banks typically publish their overdraft policies on their websites, but you can also use the list above to see what the top 20 biggest banks charge.

If you haven’t been charged an overdraft fee yet, or you want to avoid another one, follow these simple steps.

• Pay attention to your checking account balance: It’s an obvious one, but it can save you some grief. Monitoring your balance not only helps you plan your spending but it also lets you address a potential problem almost immediately. In some cases, if you can transfer money into your checking account the same day that you overdraw it, you might be able to preempt the fee.

• Maintain a solid balance in your checking account: We know, it’s not always possible to have a substantial financial cushion. But if you always keep a little extra in your checking account, then you’ll have a buffer to protect you from accidental overdrafts. (Just don’t keep too much in your checking account, since most don’t earn meaningful interest. A high-yield savings account is a better option for growing your savings.)

• Find a checking account that offers overdraft protection: Speaking of savings accounts … many banks allow you to automatically pull funds from savings (or a linked credit card) if a transaction pushes your checking account into the red. Just be sure that you’ve activated that feature, if necessary. And be cautious about relying on overdraft protection too much: If you’re frequently enlisting your savings account as a backup, you might want to consider making a budget to help you stay within your means. Note that some banks still charge a fee when you use overdraft protection, though it’s usually much less than an overdraft fee.

• Seek out a bank with no overdraft fees: As mentioned above, this is the most foolproof way to ensure you won’t have to pay an overdraft fee. It may soon become more common: In March, two senators introduced the Junk Fee Prevention Act in Congress. If passed, the act would make surprise overdraft fees illegal. But there’s evidence from the most recent CFPB overdraft fees analysis that banks are already trending away from them: Banks collected 33% fewer overdraft fees and NSFs during the first three quarters of 2022 than they did during the same period in 2021. In fact, the fees collected have trended downward every quarter since the fourth quarter of 2021. 

The best way to avoid paying an overdraft fee is to take steps so you’re not charged one in the first place. That being said, banks are often open to waiving the fee if you calmly ask them. The good news for Americans: More banks are eliminating overdraft fees entirely, so if you’re not happy with your current financial institution, it’s worth shopping around to find one with a checking account that better fits your needs.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected].