What You Need to Know About Weekend Overdraft Fees
An overdraft fee is an amount a bank usually charges you every time you spend more than your current balance. Think of it as the bank’s way of letting you borrow a few dollars, allowing you to complete your transaction. On average, a bank charges an overdraft fee of $30-$35.
You can overdraw your account by any transaction approved by your bank despite the below-zero balance – it can be through ATM withdrawals, debit card purchases, and other cashless expenditures. These charges can happen daily, depending on the bank’s policy.
The question now is, can you be charged overdraft fees even on weekends? Find out here.
Do Banks Charge Overdraft Fees on Weekends?
Weekend overdraft fees are a real thing, at least at certain banks. You will be charged as long as the bank pays a transaction on your behalf.
The rate of the overdraft fee also does not change, even if you overdraft on a business day or a Sunday. You will be charged the same amount.
Why Do Banks Charge Overdraft Fees?
Banks started charging overdraft fees so they wouldn’t lose money when their clients had insufficient funds to complete a purchase or payment. This resulted in a substantial increase in bank earnings. According to Moebs Services, banks made around $31.3 billion in 2020 thanks to overdraft fees.
However, the COVID-19 pandemic had a significant effect on economic activities worldwide. It led to the removal or reduction of overdraft fees for some banks.
US’ second-largest bank, the Bank of America, earned $832 million from overdraft (and NSF) fees alone in 2021. But on May 2022, they decided to reduce their overdraft fees from $35 to $10.
How to Get Overdraft Fees Refund?
Just call your bank. Sounds too easy? But this works sometimes. Most banks waive overdrafts as a one-time courtesy, especially if you’re a good customer and it’s your first time overdrafting.
Major financial institutions are also starting to rectify this method of adding overdraft fees. A lot of banks are now giving their customers a 24-hour grace period.
In case of an overdraft, you will have an extra day to avoid paying the fee by depositing. The bank will waive the overdraft fee if the deposit covers the exceeding amount on the previous business day.
Check the transaction policies and deposit account agreement to see if your bank allows a grace period for overdrafts.
Tips on Avoiding Overdraft Fees
Overdraft fees can be a pain in the neck, but they can be prevented. Here are some ways you can avoid overdraft fees:
Keep Track of your Account Balance
Make it a habit to check the remaining amount on your account to avoid spending too much. You can also set mobile alerts for low balances to lessen the risk of over drafting.
Banks like PNC have a “Low Cash Mode,” where they send an email or mobile notification to let you know if your balance is lesser than a certain amount you’ve set.
Get Overdraft Protection
An overdraft protection is a non-compulsory financial service that you pay at a lesser price. It lets you spend more money than your account balance without paying the usual rate for overdraft fees. However, it is super important to understand how overdraft protection works to avoid unreasonable use.
Choose a Bank that Doesn’t Charge Overdraft Fees
You can always go for a bank that does not charge overdraft fees, like Axos or Discover Bank. Some banks set higher thresholds before you are charged for overdrafting. Santander Bank, for example, will only charge you if your overdraft is $100.
Pay the Overdraft Fee ASAP
Different banks have different overdraft policies. Some banks charge overdraft fees for every transaction. Other banks charge daily for every day that the overdraft fee is not paid.
Make sure to pay any overdraft charge as soon as possible to avoid paying a ton of fees.
Bottom Line: Beware of Overdraft Fees
Overdraft was an opportunity given to a lot of customers. It was a convenient service that enabled the completion of most transactions despite the limits of a consumer’s account balance.
However, if used excessively, it is still a two-edged sword if not kept a close eye on. That’s why staying on top of your expenditures is the best way to achieve great financial health.
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