No big deal. You can just move some funds from your savings to your checking account (some banks might even automatically do this for you). BUT you soon get a notification from your bank telling you that you’ve been hit with an overdraft fee for the trouble.
Now, you have two options:
- Pay the overdraft fee and cry about how the bank is unfair.
- Call your bank and negotiate the fee away.
If you want to take option one, you can stop reading now and grab a box of tissues on your way out the door.
However, if you want to beat the banks at their own game — while picking up some great skills along the way — I’ll show you the systems how.
But first, let’s take a look at what overdraft fees are exactly as well as what a few banks are going to charge you.
What is an overdraft fee?
Overdraft fees occur when you take more money out of your checking account than is currently in there. When this happens, your bank will charge you a fee to facilitate the transaction. For some reason.
Though the fee will vary from bank to bank, here are overdraft fees from a few of the most popular banks as of July 2017:
|Bank of America||$35|
Though $34 – $36 here and there might not seem like a lot, you could find yourself saddled with hundreds of dollars in fees if you overdraft multiple times.
Luckily, you can negotiate to get them waived if you have the right scripts. That’s why I want to show you exactly how you can get your overdraft fees waived with a simple phone call with your bank.
The exact script to get overdraft fees waived
A while back, I got hit with an overdraft fee.
I know, I know. I literally run a personal finance website. But hey, we all make mistakes. And when they happen, the best thing you can do is be proactive about it.
So I saw the fee, sighed, and picked up the phone.
The conversation went like this:
RAMIT: Hi, I just saw this bank charge for overdrafting and I’d like to have it waived.
BANK: I see that fee. Unfortunately, we’re not able to waive that fee. It was [some BS excuse about how it’s not waivable].
RAMIT: Well, I’ve been a good customer with the bank for X years now and would still like to get it waived since this is a rare occurrence. What else can you do to help me?
BANK: Hmm, one second sir. I see that you’re a really good customer. I’m going to check with my supervisor. Can you hold for a second?
I was able to check with my supervisor and waive the fee. Is there anything else I can help you with today?
And just like that, I got my overdraft fee waived. This script works so well for a number of reasons:
- I repeated my complaint and asked the bank rep how they could constructively help me.
- I’ve been a loyal customer to the bank for many years, which you should always use to your advantage when calling to negotiate.
- I was polite but firm. Nothing can force a negotiation to go sour faster than a bad attitude.
You can use this exact script in order to get yours waived too.
(For more tactics on negotiations, make sure you check out my article on how to negotiate anything.)
What to do if they say no?
But there is always the chance they still say no to your request — and that’s okay. When that happens, there are three options you can take:
- Persist. Banks pay hundreds of dollars in customer-acquisition costs and don’t want to lose you. If you’re persistent enough and make it hard for them to say no, you’ll have the upper hand if they try to shoot you down.
- Hang up and call again. Sometimes getting your fee waived is a matter of hitting the right bank rep. If the first bank rep keeps shutting you out, politely thank them for their time, hang up, and dial the number again.
- Pay the fee. You’re not going to win all negotiations. Sometimes you’re going to have to just pay the fee. BUT if you have the right scripts and prepare, you can be infinitely more ready than you were before.
When it comes to overdraft fees though, the best system is the one where you don’t have to worry about them at all. That’s why I suggest learning how to avoid getting overdraft fees entirely so you don’t have to concern yourself with negotiating the rate away.
How to avoid getting overdraft fees
When it comes down to it though, the best way to approach overdraft fees is to avoid them entirely — which is why I suggest having a system in place to do exactly that.
When it comes to my system, I suggest doing two things:
- Opt out of overdraft protection
- Create a conscious spending plan
Opt out of overdraft protection
When you sign up for a checking account, many banks try to convince you to sign up for something called overdraft protection. It’s the policy in which the bank will cover you when you overcharge on your debit card, but charge you the overdraft fee for the trouble.
However, if you choose to opt out of overdraft protection, your card will simply get declined every time you attempt to charge more money than you currently have in the account.
Sure, it might be embarrassing if you’re on a date and it turns out you can’t pay for dinner because your card got declined — but it can go a long way in saving you money on overdraft fees. But if you want to avoid that situation entirely, you need to make sure you have one system in place: A conscious spending plan.
Create a conscious spending plan
Conscious spending is the practice of deciding exactly where you’re going to spend your money — going out, saving, investing, rent — and freeing yourself from feeling guilty about how you spend it. I’ve written about this before, but I’ll give a quick run down here because it’s important to know.
In order to be able to consciously spend your money, you need to automate your finances so you can invest and save money passively instead of constantly wondering if you have enough to spend.
And it’s simple: At the beginning of the month, when you receive your paycheck, the money is immediately sent to where it needs to go through automatic systems that you have set up already.
Some spending recommendations for your system:
- 50%-60% Fixed Costs: This includes things like utilities, rent, internet, and debt.
- 10% Investments: This includes your Roth IRA and 401k plan.
- 5%-10% Savings: This is money that goes towards things like vacations, weddings, home down payments, and unexpected expenses.
- 20%-35% Guilt-Free Spending: Fun money! Spend this on anything you want from nice dinners to movies.
If you want to find out more on how to automate your finances, check out my 12-minute video explaining it here:
This system is the exact same one that my friend uses to spend over $5,000 a year on shoes.
Seriously. She’ll typically buy around 10 – 15 shoes each year, and each of them cost about $300 – $500 a pair.
“THAT’S RIDICULOUS!!!! Why would anyone buy that many expensive shoes a year?”
Look, if you’re reading this, then you’re probably a Top Performer — which means you can look a little deeper.
This girl makes a healthy six-figure salary. She has a roommate, eats for free at work, and doesn’t spend much on other things.
She also automated her finances so she can consciously spend her money without worrying if she has enough money to pay for everything.
After funding her 401k and other investment accounts, she has money left over to spend on things she loves (i.e. shoes). Why wouldn’t she use her money to buy things she loves?
So instead of passing judgment, you should:
- Put this system in place
- Know exactly how much money you can spend each month
- Avoid those messy overdraft fees for good
Master your personal finances
Once you automate your finances, you’ll be well on your way to living a Rich Life and avoiding overdraft fees, debt, and embarrassment when your card gets declined during a date.
And you don’t need any fancy get rich quick schemes or snake oil. All you need is determination and the right systems put in place to help you get the most out of your financial situation and not have to worry about living “frugally” (aka sacrificing the things you love).
That’s why I’m excited to offer you something for free: My Ultimate Guide to Personal Finance.
In it, you’ll learn how to:
- Master your 401k: Take advantage of free money offered to you by your company…and get rich while doing it.
- Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
- Automate your expenses: Take advantage of the wonderful magic of automation and make investing pain-free.
Enter your info below and get on your way to living a Rich Life today — and avoid overdraft fees forever.