If you don’t chronically over-draw many banks and credit unions will refund the fee “this one time” if you call them and ask nicely. If you’ve overdrawn a bunch all at once, and gathered several fees over the course of a short time period, if you call they may be willing to collapse it to one fee (or drop it). These fees are automated, so no one is watching to see if they just charged you $130 for $10 in purchases.
A small local bank or credit union are more likely to do this, or even help you manage funds in other ways.
If you have incurred a fee (for anything) that is insurmountable, call or visit and ask for help.
I’m not sure about banks, but I know a lot of credit unions are in the process of reworking fee structures to eliminate overdraft fees entirely.
Okay, I gotta ask .. how is it possible to over draw? I've been using banks for over thirty years and if I try to draw over the limit on my credit card or beyond what's in any of my accounts, the transfer just fails. Is it just Swedish banks that do this?
I can’t speak for the entire world, but in the USA “overdraft” is a service you opt in to- or usually the bank defaults to opt in on accounts and debit cards, and you have to opt out of deliberately. It’s a “convenience service” in which the bank will pay changes or withdrawal from your account if you have insufficient funds. Common cases for that are things like if you have auto bill pay and want to avoid utilities termination if your balance doesn’t cover the bill, and of course is can be embarrassing or inconvenient to have a charge declined when out. It also applies to “emergency” situations such as if you found yourself in some situation such as being stranded while traveling and needed to use your account to get cash or debit card but didn’t have funds.
Arguably there are legitimate pocket cases for this- for example people often have multiple accounts and banks, and US checking accounts generally don’t pay interest but savings does. You can’t generally link a check or card…
.. to a savings account- there are rules on that because it is for savings- so you can only have a limited amount of transfers or withdrawals usually in a period. So people will sometimes keep the bulk of their money in savings and transfer to checking once or twice a month if they spend more than budgeted. You may not (especially before online banking etc..) be able to conduct that transfer in a timely fashion and have the funds available in a pinch- perhaps a travel emergency or a “night out” where you spent more than anticipated and find yourself in a bad spot and need to pay for a necessary item etc. but most of the time it’s people with lower income and/or who aren’t financially organized who end up with overdrafts- and those fees at one time could be $35 PER item and there didn’t used to be laws on how banks had to process the transactions- so if you had $100 and bought 11 things totaling $56, then spend $99- the banks could and often would process the LARGEST transaction first-
By doing this the other 11 things your account could have covered hit as overdrafts at a cost of over $400 to you- vs. if they had processed the 11 you could afford and then ran the 1 for $99 which would cost only $35. So the practice has been used and can be seen as predatory- though for people who will never or seldom ever use or need to use overdraft, it can be nice to have on an account just in case. You may ask in such a situation why not use credit cards? A legitimate reasons may be that you need cash from an ATM (most US credit cards have high interest on taking credit as cash) or you may not be able to use a credit card for the transaction- or your specific card as not all merchants take all cards.
What is usually the reason is that people over drafting either have poor/no credit because they are young or not very finically organized, or they have poor interest rates or are over extended on credit for the same reasons or some exceptional situation. So if you have money you probably won’t overdraft and if you have money you can use credit to avoid overdraft, but if you don’t have money or manage it well you are more likely to overdraft and the tools to avoid it are less available to you.
But anyone with an overdraft clause in their accounts can overdraft- US banks do one other things besides cover your overdrafts that can cause issues. They often post funds for checks or deposits and make them immediately available for convenience- before the transfer has cleared and the money is actually confirmed. So you can possibly cash a $100 check when you only have $50 in your account, and if the check doesn’t clear you can be over for the extra $50. You can also deposit the $100 check in the $10 account and then spend $30 before the check clears and have the check not clear.
And the other common way is that you have a transaction pending- you spent $60 out of $100 in your account but it didn’t process yet. You recall spending the money and check your balance- it says “$100,” so you think that you have $100 assuming that your purchase from a day or a week ago has already been taken out. You spend another $60 and are overdrawn when the two transactions process.
Unless you’re very inexperienced and/or very bad with finances that example is simplified- you’d probably be able to figure out $100 and if you had $100 be more mindful- but when you have more money and you are dealing with multiple transactions over time for various amounts and consider auto bill pay and such- that’s where most people can run into trouble keeping track. With checks we used to “balance checkbooks” to keep track of pending and recurring bills and account purchases- it is uncommon for people to “balance” their debit card and digital spending like PayPal etc. that can all pull from the same account in the same way. So people lose track.
On the one hand it can be and often is a predatory practice. Like most financial practices. On the other hand it has legitimate uses when used as a financial tool in properly managed personal finances. It’s also both a defense and recrimination of the system that most financial lenders offer a line of credit to protect against overdraft so that instead of a fee any overdrafts are treated similarly to a credit card, there is interest but not if you pay before the term in full- like a credit card. These are often easier to get than other lines of credit and often report to credit bureaus and can help build credit if used right- but generally aren’t a great financial tool for most people. It’s also the case that when we consider an overdraft on a $2 purchase can be $20+… a loan on those terms would be criminal. That’s loansharking at those rates.
So overdraft fees in a sense allow banks to offer a short term loan that can charge 10x or more the principle amount without running afoul of the law or financial regulators. And the sorts of people most likely to need these “loans” are the sorts of people usually least financially capable or educated. So like “payday loans” there is a disproportionate bias for the service by vulnerable persons without other options, and these groups make up the bill of profits institutions make from these services. If one could qualify for the “overdraft credit” to use the service without the fees, one most likely doesn’t need to overdraft to begin with except perhaps on rare occasion. So the fact the “option” exists doesn’t really help those alt at risk.
A small local bank or credit union are more likely to do this, or even help you manage funds in other ways.
If you have incurred a fee (for anything) that is insurmountable, call or visit and ask for help.
I’m not sure about banks, but I know a lot of credit unions are in the process of reworking fee structures to eliminate overdraft fees entirely.
Arguably there are legitimate pocket cases for this- for example people often have multiple accounts and banks, and US checking accounts generally don’t pay interest but savings does. You can’t generally link a check or card…
And the other common way is that you have a transaction pending- you spent $60 out of $100 in your account but it didn’t process yet. You recall spending the money and check your balance- it says “$100,” so you think that you have $100 assuming that your purchase from a day or a week ago has already been taken out. You spend another $60 and are overdrawn when the two transactions process.