Avoiding overdraft fees might not be as hard as you think. Even though banks still see these fees as revenue, you have a certain amount of power.

An Oct. 3, 2017 article by Robert Barba on Bankrate.com offered advice and presented recent survey results.

An overdraft fee is incurred when you purchase a dollar amount past the amount of cash you have in your checking account. According to Bankrate, an average overdraft fee currently is $33.38.  For comparison’s sake, back in 1998, the average overdraft fee was $21.57.

The first time you incur an overdraft fee, call your bank immediately. Most financial institutions will waive one overdraft fee per year as a courtesy, but you must ask for the forgiveness.

Avoiding Overdraft Fees with Technology’s Help

Banks and credit unions often offer daily glances at your account through either emails or texts. Busy customers might want to establish an alert message prompted by a low balance. Such an alert will stand apart from the crowd of technological noise you receive and will give you time to take action for avoiding overdraft fees.

The key is not to set the amount so high that you constantly receive alerts, but not so low that a forgotten automatic payment could incur an overdraft fee.

Another way of avoiding overdraft fees is to link your savings account to your checking account. Even though the financial institution might charge $5 or $10 to transfer money from savings to checking in the event you empty your checking account, that fee will still be less than an overdraft fee.

Plus, if you have your handy alert message in time, you can move the money from savings to checking yourself at no charge.

Cancel Expensive Overdraft Protection

Financial institutions such as Capital One are under investigation for possibly charging excessive overdraft fees.

Many times, excessive fees are part of an “overdraft protection” plan promoted under the guise of helping the consumer. With names such as “courtesy overdraft privilege” and “bounce protection,” consumers subliminally receive the message these programs benefit them and not the banks.

According to Pew Charitable Trusts, U.S. financial institutions made more than $11 billion in overdraft fee revenue last year.

Overdraft protection plans generally mean high fees are incurred when you make a purchase that sends your checking account in the red. For instance, if you go out with friends and buy a $8 latte when you only have $5 left in your checking account, your debit card will allow the $8 charge to go through for a $35 overdraft fee.

In this case, avoiding overdraft fees would cost you the embarrassment of having your latte transaction denied. If you prefer to have the transaction declined and avoid the overdraft fee, opt out of your bank’s overdraft protection plan.

If you believe you have paid excessive overdraft fees to Capital One or any other financial institution, you could benefit from speaking with an attorney regarding your legal options for compensation.

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