Overdraft Fees: Understand Your Rights & How to Get Reimbursement

Picture this: You login to your checking account to review your transactions — and BAM!

You've been hit with a $35 overdraft fee. Your account has a negative balance, and it's showing in bold red font. (See also: Banks Can Manipulate Your Transactions, Then Charge You 1750% Overdraft Fee)

What do you do now?

Two things: Get your money back, and make sure it never happens again.

I'll show you how to do both. Let's start with getting your money back.

Getting Your Overdraft Fee Refunded

Banks spend lots of money trying to earn your business. Your deposits are used to lend money to other customers, in products such as a mortgages or business loans. They profit by charging interest and end up pocketing millions of dollars.

So once they get you as a customer, the last thing they want to do is lose your business. You mean a lot to them.

Knowing this, you're now in a position of power — negotiating power.

To get your overdraft fee refunded, just call customer service and ask for the fee to be removed. Be polite, but firm.

Tell the representative what you want, and why it's in their best interest to give you what you want.

Don't get angry, but be persistent. If you've been a responsible customer, you'll get the waiver sooner or later.

If you need more guidance, follow this simple script on negotiating out of bank fees. Trust me; it works. I know, because I've used it myself!

It'll be the quickest, easiest $35 you'll ever save.

Yet you should only need to do this once. Because after you get your money back, you'll move on to the next step.

Make Sure It Never Happens Again

Once you get your money refunded, you should set up your finances so that overdraft fees will be a thing of the past for you. Here's how.

Put Your Bills on Your Card

First, charge everything you can to your credit card. This includes routine expenses such as your cable, internet, and cell phone bills, plus other stuff such as eating out, groceries, and gas purchases.

By putting these charges on your card, overdraft fees will no longer be an issue.

Why?

Because you can set up automatic payments to be sent from your checking account to your credit card before your bill's due date, so that you don't get hit with a late fee. Better yet, since you're charging purchases to the card that you'd normally make anyway, you'll get more bonus points or cash back.

But what about other bills that can't be charged to your credit card? Some expenses must be paid directly from your checking account. These can include your monthly electricity and gas bills, your rent or mortgage, and other expenses such as DMV fees.

Plan and Manage Your Expenses

Here's how to manage both your credit card and non-credit expenses.

Since many of us get paid twice a month, the first thing to do is to wait for your second payday of the month.

Let's say you get paid at the end of May. Your credit card bill will likely be due in the beginning of June, for purchases you made in the April and May timeframe.

Knowing this, just perform this simple calculation — since your paycheck goes into your checking account, enter your checking account balance first. Then subtract your upcoming credit card balance that you'll be fully paying off. After that, subtract the upcoming expenses that can't be charged on your card.

Lastly — and most importantly — leave $200 as a buffer in case unexpected expenses pop up before your next pay period. Then you're free to do whatever you want with the money that remains — save it, invest it, or splurge with it (okay, don't splurge with it).

That's it. Once you set up this process, maintaining it will be easy, like second nature, and you'll never have to worry about getting hit with an overdraft fee again.

Have you ever been socked with an overdraft fee? Did you fight it and win? Tell us about it in comments!