Ask for an Overdraft Fee Waiver
A few weeks ago, as the coronavirus pandemic escalated, many financial institutions announced programs to help clients facing financial difficulties. Most of these programs allow you to request deferred payments and refrain from charging you late fees associated with those payments. But one bank charge you can still see in your account during this time? Overdraft fee.
Overdraft fees came to attention recently when the IRS began sending out payments to tackle the coronavirus. Since CARES does not prevent private debt collectors from accepting these payments, consumer banks – whose overdraft fees are considered private debt – could technically use your check to cover your overspending balance.
Chase, Bank of America, Wells Fargo and Citi immediately announced that they would not use ancillary payments to cover outstanding overdraft fees. Ally Bank announced that it will waive all fees associated with overdraft and other penalties for 120 days, in addition to ensuring that all clients receive their full check from the government.
But while banks have pledged to help clients during the pandemic, there is some confusion over which fees are waived and how.
Some banks require customers to directly request overdraft waiver, insufficient funds, or excessive withdrawal fees, while others automatically credit customer accounts for these penalties.
Some lawmakers are pushing for banks to abolish penalties altogether during the pandemic.
Senators Corey Booker and Sherrod Brown sent a letter to the CEOs of 14 banks last week asking them to temporarily ban overdraft fees during the coronavirus emergency. Booker has long opposed overdraft fees, which can easily run as high as $ 33-36 each .
Shortly after this letter was sent, representatives David Chichillin and Caroline Maloney introduced a bill to prevent banks from charging overdraft fees during declared emergencies.
This isn’t the first time lawmakers have tried to stop banks from charging overdraft fees.
Maloney introduced the Overdraft Protection Act of 2019 to the House of Representatives in September of that year, seeking to make overdraft fees more transparent by forcing banks to make overdraft protection a service they wish. In the Senate, Booker and Brown have twice introduced the overdraft fee cap bill.
The latest House of Representatives bill prohibits overdrafts and insufficient fund fees for any transaction, no matter where it took place (ATM, cashier, etc.). It would also prevent financial institutions from reporting overdraft fees to credit reporting agencies. The bill will allow banks to “provide a reasonable overdraft line of credit” to consumers who need it.
The overdraft ban, if passed, will be in effect the day after the President’s announcement of a major disaster and will remain in effect for 120 days after the emergency ends. A ban can also be introduced at the state level for more geographically oriented activities.
But the fact that the bill was introduced does not mean that it will move forward quickly. Congress, as you know, has done a bit of work lately, including the latest spending package designed to support the economy during the pandemic.
In the meantime, if you incurred an overdraft fee to your checking account that was not automatically refunded, you will need to contact your bank to inquire about its policy regarding overdraft fees during the pandemic.
While some banks have online forms that you can use to request assistance with the pandemic, not all of them have an online ability to handle overdraft costs. You may have to start an online chat or call, which can lead to long waiting times.
As long as you are logged into your bank account, now is a good time to set up low balance alerts or get a daily notification of your current account balance.
You may not be in a place where you can turn off overdraft protection or avoid overdraft on your account, but getting this alert when your account is depleted may give you a little time to choose an alternative payment option or request assistance from your bank …