How to Avoid Overdraft Fees During the COVID-19 Pandemic

The global pandemic and subsequent lockdowns have caused job loss and financial stress for millions of Americans. Money is tight, and people are making sure they get the most out of every dollar.

When your budget is already tight, it’s even more important to avoid any bank fees, let alone $30+ overdrafts.

Fortunately, you have a great chance of getting your overdraft fees waived. Here’s how.

Banks Are Waiving Overdraft Fees

Many banks realize their customers can’t afford bank fees in the current situation. As a result, they are waiving overdraft fees, among other types of assistance.

Here are some of the large banking institutions that have been waiving fees for their customers during a temporary period:

  • Ally
  • BBVA
  • Capital One
  • Chase
  • Citibank
  • HSBC
  • PNC
  • USAA
  • Wells Fargo

However, for many of these banks, it’s essential that customers proactively reach out in the event of an overdraft, as the fees might not be waived automatically. Also, be mindful that many of these programs are temporary and may be discontinued at any time.

Don’t worry if you don’t bank with one of the above. If the pandemic and lockdowns have impacted you, and you overdraw your account for any reason, contact your bank immediately. Many banks are willing to work with loyal customers to help them stay afloat during the pandemic.

Other Tips for Avoiding Overdraft Fees

It’s possible to waive or avoid overdraft fees, even when the world isn’t under mass lockdown. Here are some tips for doing so.

1. Reevaluate Your Budget and Slash Spending if Necessary

If you overdraw because you’re in dire financial straits, take a good, hard look at your budget. Cut anything that isn’t essential until you’re back on stable financial ground.

If your budget is already tight, try these other tips, but for people who haven’t actively budgeted an overdraft can be a warning bell of bad financial habits.

2. Opt Out of Automatic Overdraft

Many banks opt you into overdraft automatically. You can opt right back out if you please.

If you opt out, the bank will reject your payments and return them to you as unpaid.

3. Set Up Overdraft Protection

Overdraft protection is different from automatic overdrafts. This feature lets you link another account — usually a savings account — and automatically transfer money from your linked account if you overdraw.

Be careful, though. Some banks charge for overdraft protection, and it can quickly get more expensive than an occasional overdraft fee.

4. Maintain Extra Funds in Your Account

Maintain a “cushion” amount in your checking account. Promise yourself that you will not let your account go below, say, $100.

Whatever amount you use as a cushion, you should only dip below in an emergency — and only if your emergency fund is depleted.

5. Set Up Low Balance Alerts

Set up low balance alerts along with your financial cushion. Create alerts for amounts below that cushion, too, just in case.

If you get a low balance alert, stop spending immediately and move money into your account, if possible.

6. Negotiate Away Overdraft Fees

Many banks will give you a one-time courtesy fee removal even outside of situations like the current pandemic. Just call and ask.

You may still be able to get subsequent overdrafts waived if you can prove you have the cash. To do so, tell them you’ll quickly transfer money into your account to cover the overdraft and follow through on your promise.

Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: Financial Services, Overdraft Fees, Pandemic, Personal Finance