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Banks make money in many ways, including by charging fees. And according to a report from the Financial Health Network, consumers paid over $12.1 billion in overdraft and NSF fees alone in 2024.
The good news is that banks sometimes refund these charges, especially if you have a good account history or the overdraft was a one-time slip. Knowing how to request a refund — and when you’re most likely to get one — could help you recover money that might otherwise be gone for good.
What are overdraft fees?
Overdraft fees occur when you make a transaction — such as a debit card purchase, ATM withdrawal, check, or automatic payment — that exceeds the available balance in your bank account. In that situation, the bank temporarily covers the shortfall and then charges a fee for doing so.
This fee varies by financial institution, but you'll typically pay about $35 per transaction. Some financial institutions also charge continuous overdraft fees or daily overdraft fees — a fee for every day your account remains negative.
The order transactions are processed is also up to the bank's priority, potentially worsening the impact of overdraft fees. For example, let's say you have $500 in your account and you have the following transactions:
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$275 for a utility bill
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$250 for a car payment
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$50 for a cell phone bill
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$50 for internet service
If the bank paid out the transactions from the smallest amount to the largest, there would only be one overdraft — the final utility bill. But because of how banks process transactions, they may pay the highest bill first, so you'd have to pay the overdraft fee for each of the next three transactions. If the fee was $35 per transaction, you'd have to pay $105 in fees.
Note that for debit and ATM transactions, you usually have to consent to an overdraft and the corresponding fees. Otherwise, the bank will deny the transaction from going through.
Read more: How much can I overdraft my checking account?
How to avoid overdraft fees
Especially for those living paycheck-to-paycheck, overdraft fees can be a severe issue. They’re expensive, and some people may even avoid traditional banks in an attempt to save money. However, there are better ways to avoid overdraft fees.
Enroll in overdraft protection
Overdraft protection is an optional feature available on some bank accounts. The feature links your checking account to another savings account or line of credit. If the main account is overdrawn, the bank will immediately transfer money from the linked account to cover the cost, helping you avoid overdraft fees.
Keep in mind that overdraft protection transfers may come with their own fees, though they will likely be a lot less than overdraft fees.
Read more: Overdraft coverage vs. overdraft protection: What's the difference?
Keep a buffer in your account
If you're struggling to make ends meet, building enough of a financial cushion to serve as a buffer can feel challenging, but it's a critical step in avoiding fees. How much you need to keep in a checking account depends on your expenses and finances, but establishing a safety net of $100 to $1,000 beyond the money you need for your bills will ensure your account isn't accidentally overdrawn.
Maintain a budget
One of the best ways to avoid overdraft fees is to be aware of what money you have and where every dollar goes. If you create a budget and track your spending — including noting what bills are upcoming — you can plan ahead and make sure you have enough cash in your account for those expenses.
Opt for account alerts
Many banks and credit unions allow customers to set up account alerts; you can create an alert to notify you if your account balance reaches below a certain threshold, such as $100 to $250, giving you time to transfer funds into the account before it's overdrawn.
Switch to a bank or credit union that doesn't charge overdraft fees
Although overdraft fees are common, they don't apply to all accounts. Below is a sampling of financial institutions that offer overdraft fee-free checking accounts:
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How to get overdraft fees refunded
Although there are ways to avoid overdraft fees, there may be times when an overdraft fee is incurred despite your best efforts. If that happens, follow these tips to get the fee waived or refunded:
Take advantage of account grace periods
Some financial institutions offer overdraft forgiveness. These programs, also known as overdraft grace periods, give you time to add money to your account to cover the overdrawn transactions. The length of time you have to make a deposit or transfer varies by bank, but you usually have until the end of the next business day.
Contact customer support
Although it may feel uncomfortable, the most effective way to get reimbursed for your overdraft fees is to contact the bank or credit union's customer support department. If you don't have a history of overdrawing your account, the bank may be willing to refund or waive the fee to keep you as a good customer.
Call the bank and explain that you overdrew your account. If there are extenuating circumstances, such as an illness or a delayed paycheck that caused the overdraft, share those details with the representative and ask for a refund. If the representative is unable to help you, request a manager or supervisor; be polite and courteous, but don't be afraid to request additional assistance.
Read more: Can overdrafting affect your credit score?
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