How to Dispute Overdraft Fees and Win

The advent of personal banking represents a great modern convenience. The idea of personal banking is that the customer is at the center of the action, as opposed to the bank itself. Free checking, online banking, linked savings and checking accounts, abundant ATM networks and overdraft protection are all bank offerings designed to make life easier for the average customer. At least, that’s what their marketing departments want you to believe!

In reality, much of personal banking is still all about the banks and their profit margins. For example: free checking is not so free, when you consider all of the fees that get piled on each month. ATM machines are wonderful, but try to make a withdrawal from another bank’s machines and pay heavy withdrawal fees. And overdraft protection may be the worst of all: a cunning method that banks have devised to separate you from your money, even while being disguised as a “protection program.”

Overdraft protection programs do indeed protect the customer in one important way: they prevent debit and credit charges, as well as checks, to be rejected by the bank by reason of insufficient funds. But that’s about where the protection part ends. Here’s why overdraft protection programs are not in all ways beneficial to the customer:

1. A fee of $30 can be charged to the customer’s account, even when the account is only overdrawn by (say) $3 and is paid back within a few days by the customer. If the overdraft protection were likened to a short-term loan, the interest rate that the customer pays on this loan would be well over 1,000%. That should be illegal.
2. When processing outstanding debit and credit charges – as well as checks – many national banks practice something called “transaction stacking.” Simply put, this is a method whereby the bank processes the larger transactions before processing the smaller ones, which increases the chances of an overdraft fee being charged. Banks do this tricky practice simply so that they can increase their profits by charging customers more money in fees each month.

If you are upset about one or more overdraft fees having been charged to your account, you are not alone. This is an everyday occurrence across the country for countless people.

How to Dispute Overdraft Fees and Win

There are effective ways to dispute your overdraft charges. Here are some tips to increase your chances of getting the fee removed:

1. Dispute the charge right away. The longer you wait, the worse your chances are of convincing your bank to refund the fees.
2. Get your facts straight. Write down the date, amount and store or vendor name of the transaction that resulted in the overdraft fee. Think of yourself as part detective, part defense lawyer. You’ll want to get your story straight in terms of the who, what, when, where and why before contacting your bank.
3. When talking to the bank representative on the phone or in person, be sure to remain polite. Remember, they are just another person on the other end of the line, trying to help you out. Avoid accusing the bank (or that person) of wrongdoing. Just simply state the facts and ask that the fee be reversed.
4. If this is your first overdraft in 6 months or more, use that fact to your advantage. Point out to the bank representative that you are an excellent customer who rarely – if ever – makes this mistake.

Of course, disputing bank fees may not be the best use of your time. An alternative is to simply switch to a bank that does not charge overdraft fees – even if you overdraw your account. These banks are not always easy to find, but becoming a customer of one can save you hundreds of dollars a year in fees.