Ask Your Bank To Waive An Overdraft Fee - Tips That Help
If you are curious about how to ask your bank to waive an overdraft fee, then this article will help you about the things you need to know regarding this topic. When you're already struggling financially, being charged overdraft fees can be devastating, both emotionally and financially. Even if you are not in financial difficulty, an overdraft fee is inconvenient.
Author:Stefano MclaughlinReviewer:Luqman JacksonFeb 20, 2023214 Shares2.9K Views
If you are curious about how to ask your bank to waive an overdraft fee, then this article will help you with the things you need to know regarding this topic. When you're already struggling financially, being charged overdraft fees can be devastating, both emotionally and financially. Even if you are not in financial difficulty, an overdraft fee is inconvenient.
Banks may limit the number of overdraft fees charged in a single day, but even so, the fee can add up quickly, especially for people who overdraft frequently. In a 2020 study by research firm Oliver Wyman, frequent overdrafters average around 11 overdraft or insufficient funds fees (NSF), and overdraft and NSF fees generate $17 billion for banks each year.
You do, however, have options for avoiding overdraft fees, especially if you don't regularly overspend your checking account. You may be able to avoid future overdraft fees if you have a better understanding of when banks charge them. On the rare occasion that you overspend, knowing how to communicate with your bank can help you avoid or reduce overdraft fees.
Overdraft Fees
An overdraft occurs when funds are withdrawn in excess of what is available in a current account. This can be money in a bank account for financial systems. It could be groundwater in an aquifer for water resources.
The account is said to be "overdrawn" in these cases. In the economic system, interest is normally charged at the agreed rate if there is a prior agreement with the account provider for an overdraft and the amount overdrawn is within the authorized overdraft limit. If the negative balance exceeds the agreed-upon terms, additional fees and higher interest rates may be imposed.
The Royal Bank of Scotland established the first overdraft facility in 1728. William Hogg, a merchant, was having difficulty balancing his books and was able to reach an agreement with the newly established bank that allowed him to withdraw funds from his empty account to pay his debts before receiving his payments.
As a result, he was the world's first recipient of cash credit from a bank. Within decades, the benefits of this system for both customers and banks became clear, and banks throughout the United Kingdom embraced this innovation.
With the advent of industrialization, new businesses required an easy form of a credit to kick-start their operations without having to take out loans against securities they did not necessarily own.
The philosopher David Hume recognized the significance of this new financial innovation, describing it in one of his essays as "one of the most ingenious ideas that have been executed in commerce."
Reasons For Overdrafts
Overdrafts can happen for a variety of reasons. These could include:
- Intentional loan- The account holder runs out of money and makes an insufficient-funds debit on purpose. They accept the fees and pay off the overdraft with their next deposit.
- Failure to keep an accurate account register - The account holder fails to accurately account for account activity and overspends due to negligence.
- ATM overdraft- Banks or ATMs may allow cash withdrawals despite a lack of funds. At the time of the withdrawal, the account holder may or may not be aware of this fact. If the ATM is unable to communicate with the cardholder's bank, it may automatically authorize a withdrawal based on the authorizing network's preset limits.
- Temporary deposit hold- The bank may place a deposit made to an account on hold. This could be due to Regulation CC (which governs the placement of holds on deposited checks) or to the policies of individual banks. The funds may not be available right away, resulting in overdraft fees.
- Unexpected electronic withdrawals - The account holder may have previously authorized electronic withdrawals by a business. This could happen in both parties' good faith if the electronic withdrawal in question is made legally possible by contract terms, such as the start of a recurring service after a free trial period. A wage garnishment, an offset claim for a taxing agency, a credit account or overdraft with another account with the same bank or a direct-deposit chargeback to recover an overpayment could all have resulted in the debit.
- Due to human error, a merchant may incorrectly debit a customer's account. For example, a customer may authorize a $5.00 purchase, which may result in a $500.00 charge to their account. The customer can recover these funds by filing a chargeback against the merchant.
- Chargeback to merchant- A chargeback to a merchant account may occur as a result of an incorrect credit or debit card charge to a customer or a customer making an unauthorized credit or debit card charge to someone else's account in order to "pay" for goods or services from the merchant. The chargeback and related fee may result in an overdraft or insufficient funds to cover a subsequent withdrawal or debit from the merchant's account that received the chargeback.
- When a customer makes a purchase with their debit card without entering their PIN, the transaction is treated as a credit transaction. The funds are held in the customer's account, decreasing the available balance. However, the merchant does not receive the funds until the transaction batch for the period in which the customer's purchase was made is processed. Because banks do not keep these funds indefinitely, the bank may release the hold before the merchant collects the funds, making these funds available once more. If the customer spends these funds, the account will overdraw when the merchant collects for the original purchase, unless an interim deposit is made.
- Bank fees- The bank charges the account holder an unexpected fee, resulting in a negative balance or insufficient funds for a subsequent debit from the same account.
- Playing the float entails the account holder debiting an account with insufficient funds, believing he will be able to deposit sufficient funds before the debit clears. While many cases of playing the float are done with good intentions, those committing cheque kiting take advantage of the time involved in clearing the cheque and the difference in the processing of debits and credits.
- Returned cheque deposit- When an account holder deposits a cheque or money order, it is returned due to insufficient funds, a closed account, or being discovered to be counterfeit, stolen, altered, or forged. An overdraft occurs as a result of the cheque chargeback and associated fee, or as a result of a subsequent debit that is reliant on such funds. This could be due to a known bad deposited item, or the customer could be a victim of a bad cheque or a counterfeit cheque scam. If the resulting overdraft is too large or cannot be paid in a timely manner, the bank may sue or even file criminal charges.
- Intentional fraud occurs when the account holder makes an ATM deposit with misrepresented funds or deposits a known bad cheque or money order (see above), and enough money is debited before the fraud is discovered to result in an overdraft once the chargeback is made. An identity thief could commit fraud against one's own account, another person's account, or an account set up in another person's name.
- Bank error- When a cheque debit is posted for an incorrect amount due to human or computer error, an amount other than that intended by the maker is removed from the account. Some bank errors can be detrimental to the account holder, while others can be advantageous.
- Victimization – The account could have been the victim of identity theft. Demand draft, ATM-card, or debit-card fraud, skimming, cheque forgery, an "account takeover," or phishing could all result in this. The criminal act may result in an overdraft or cause a subsequent debit to result in one. The money or cheques from an ATM deposit could also have been stolen, or the envelope could have been lost or stolen, in which case the victim is frequently denied restitution.
- Intraday overdraft- When a debit occurs in a customer's account, it causes an overdraft, which is then covered by a credit that posts to the account the same business day. Whether or not this results in overdraft fees is determined by the deposit-account holder agreement of the specific bank.
- Merchant overdraft- An unsecured overdraft provided by a financial institution to a merchant in which the amount overdrawn is within the authorized overdraft limit, which is typically very high.
How To Recover Overdraft Fees
If you have been charged an overdraft fee, you may be able to get it refunded in a few steps if you are not a repeat offender.
Contact Your Bank
Call your bank as soon as you notice an overdraft fee has been charged. The number is easily accessible on the back of your debit card, the bank's website, or your mobile app.
Submit Your Request
Inform the bank that you want the overdraft fee waived. "I noticed I was charged an overdraft fee on [date], and I'd like to have it removed," you can say.
It may be beneficial to provide the bank with some background on what caused the overdraft. For example, your pay was delayed, a bill was paid sooner than expected, or you have been experiencing financial hardship.
Make Use Of Your Bank History
Bring this up if you've been a good bank customer and have avoided overdraft fees in the past. For example, you could say, "I've been a loyal customer for many years, and I rarely overdraft. Is there anything you could do?"
Be Courteous
Remember, you're requesting a favor from the bank. A little politeness goes a long way. Avoid becoming enraged, even if the customer service representative refuses to waive the fee.
People Also Ask
Do Overdraft Fees Hurt Your Credit?
Overdraft fees are not monitored by credit reporting agencies, so having to pay one will not affect your credit score.
How Long Do You Have To Pay Back An Overdraft?
This varies by bank, but you usually have five business days to deposit sufficient funds into your account to cover the overdraft. In addition, the bank may charge you overdraft fees.
How Many Times Can I Overdraft?
Although not all banks adhere to the same policies, your bank is unlikely to limit the number of times you can overdraw your account. However, your bank may impose a dollar limit on the amount of an overdraft that it will pay.
Final Words
In this article we talked about on how to ask your bank to waive an overdraft fee. It's possible that the overdraft fee will be phased out at some point in the near future. Until then, if you are asked to pay one, the solution is often refreshingly simple: simply ask if you can get a pass this time.
Stefano Mclaughlin
Author
Luqman Jackson
Reviewer
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