Fee Fight: How to Pass on Overdraft Protection

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Just about every bank customer has a horror story of how his or her bank charged them $30 or more in overdraft fees. What’s less common are stories on how bank consumers can actually opt out of or reverse overdraft charges.

But it’s a story that needs telling.

The story starts with a shift in bank policies toward overdraft fees, as BankingMyWay pointed out earlier this week. While Congress mulls what action to take against bank overdraft fees, big banks like Bank of America (Stock Quote: BAC), JPMorgan Chase (Stock Quote: JPM) and Wells Fargo (Stock Quote: WFC) all rolled out plans to limit overdraft fees.

But what if your bank has no such plan, or if it does, do you really want a policy that wil let you fully opt out of bank overdraft plans?

The fact is, you can opt out of overdraft "services."

Obviously, job one in that regard is to be especially careful with your checking account. Savvy consumers can sign up for an online account and check their balances every day – or at least before going shopping or using their debit cards to pay bills. Studies show that’s exactly what most bank consumers do. An American Bankers Association survey shows that 82% of bank customers have not been hit with a bank overdraft fee in the past year. And, of the 18% who’ve been penalized with such a fee, 64% had more than one overdraft fee over that year-long time period. That suggests bank overdraft fees are focused on a relatively small group of bank customers.

These “repeat offenders” don’t seem to mind. According to the ABA, 96% of bank customers slapped with an overdraft fee say they were pleased their overdraft was covered.

But if you want to opt out, or minimize the damage done by bank overdraft programs, try these tips:

Ask – and be persistent. Bank managers probably don’t want you to know this, but they have the power to allow you to take a pass on overdraft protection. Over-the-phone customer service reps will fight you tooth and nail on this. So it’s much better to visit your bank in person and demand that you be allowed to opt out of overdraft programs. A tip: If you meet resistance, point how other banks are taking steps to curtail their overdraft programs – and threaten to take your business to one of them.

Take advantage of “gray areas." There is no shortage of loopholes in bank overdraft policies. Feel free to use them to your advantage. For example, gas stations are notorious for putting “holds” on your bank account for more than the actual dollar amount you tallied at the pump. If you get whacked with an overdraft fee because of such a hold, take the receipt to your bank. Chances are they’ll waive the fee.

Take the “kitchen sink” approach. If you’re a loyal bank customer and rarely suffer an overdraft fee, point out that you have a stellar record and therefore shouldn’t be penalized. Or, if the purchase that triggered the overdraft fee was $10 or so, bring that to the bank’s attention. In these instances, make sure to stress your loyalty to the bank – and that you want the bank to show some loyalty to you.

Remember, bank managers have the power to waive overdraft fees. So when it comes to opting out of overdraft fees, or at least having them reversed, you have more leverage than you think.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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