Overdraft fees are fees charged by your bank when you have too low a balance to cover a payment you've made. To avoid the transaction being cancelled, the bank provides what is called an 'overdraft protection service' in which they cover the balance difference for you, but also charge a fee for doing so. Overdraft fees are generally around $30, although this will vary based on your individual bank. For someone who is frequently over-drafting on their account, that can add up to hundreds of extra dollars per year. How can I avoid overdraft fees? As a part of Federal Law, the government requires financial institutions to obtain your permission before adding overdraft protection to your account. This allows the bank to apply a fee if you accidentally remove too much cash from your account. While the goal is to not overdraft your account at all, this protection service is useful and can save you some potential embarrassment by preventing your debit or credit card from getting declined! An overdraft fee is typically around $35 dollars, but it varies by banking institution. According to the Consumer Financial Protection Bureau, overdraft fees cost Americans almost 17 billion dollars annually. With a few easy steps you can make sure that you are easily preventing this unnecessary pocketbook expense.Overdraft Fee Definition
How to Avoid Overdraft Fees
How Much Is an Overdraft Fee?
Overdraft Fee FAQs
Overdraft fees are fees charged by your bank when you have too low a balance to cover a payment you’ve made.
An overdraft fee is typically around $35 dollars, but it varies by banking institution.
The best way is to not spend more than you have in your account! After that, try these ideas: set up online banking (it's easier to keep track of account activity); set up balance alerts; build a cushion into your account.
According to the Consumer Financial Protection Bureau, overdraft fees cost Americans almost 17 billion dollars annually.
As a part of Federal Law, the government requires financial institutions to obtain your permission before adding overdraft protection to your account. Without it, withdrawals may be rejected if you try to spend money you don't have.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.