Banks make money in many ways, including by charging fees. According to a 2024 report released by the Consumer Financial Protection Bureau, major banks received $12.6 billion in annual revenue from overdraft fees alone.

It's because of those fees that many people avoid the banking system entirely, but there are ways to be reimbursed for ATM fees, and there are even some banks that have eliminated overdraft fees entirely.

Learn how to get overdraft fees refunded — and how to avoid them in the first place.

What are overdraft fees?

Financial institutions charge overdraft fees when you make a transaction that exceeds the available balance in your bank account. This fee varies by bank or credit union, but you'll typically pay about $35 per transaction. Some financial institutions also charge continuous overdraft fees or daily overdraft fees — a fee for every day your account remains negative.

Overdraft fees apply to transactions you make via check, debit card, or cash withdrawals at an ATM. However, for debit and ATM transactions, you usually have to consent to an overdraft and the corresponding fees. Otherwise, the bank will deny the transaction from going through.

The order transactions are processed is also up to the bank's priority, potentially worsening the impact of overdraft fees. For example, let's say you have $500 in your account and you have the following transactions:

• $275 for a utility bill

• $250 for a car payment

• $50 for a cell phone bill

• $50 for internet service

If the bank paid out the transactions from the smallest amount to the largest, there would only be one overdraft — the final utility bill. But because of how banks process transactions, they may pay the highest bill first, so you'd have to pay the overdraft fee for each of the next three transactions. If the fee was $35 per transaction, you'd have to pay $105 in fees.

Read more: Can overdrafting affect your credit score?

How to avoid overdraft fees

Especially for those living paycheck-to-paycheck, overdraft fees can be a severe issue. They’re expensive, and some people may even avoid traditional banks in an attempt to save money. However, there are better ways to avoid overdraft fees.

Enroll in overdraft protection

Overdraft protection is an optional feature available on some bank accounts. The feature links your checking account to another savings account or line of credit. If the main account is overdrawn, the bank will immediately transfer money from the linked account to cover the cost, helping you avoid overdraft fees. Keep in mind that overdraft protection transfers may come with their own fees, though they will likely be a lot less than overdraft fees.

Keep a buffer in your account

If you're struggling to make ends meet, building enough of a financial cushion to serve as a buffer can feel challenging, but it's a critical step in avoiding fees. How much you need to keep in a checking account depends on your expenses and finances, but establishing a safety net of $100 to $1,000 beyond the money you need for your bills will ensure your account isn't accidentally overdrawn.

Maintain a budget

One of the best ways to avoid overdraft fees is to be aware of what money you have and where every dollar goes. If you create a budget and track your spending — including noting what bills are upcoming — you can plan ahead and make sure you have enough cash in your account for those expenses.

Opt for account alerts

Many banks and credit unions allow customers to set up account alerts; you can create an alert to notify you if your account balance reaches below a certain threshold, such as $100 to $250, giving you time to transfer funds into the account before it's overdrawn.

Switch to a bank or credit union that doesn't charge overdraft fees

Although overdraft fees are common, they don't apply to all accounts. Below is a sampling of financial institutions that offer overdraft fee-free checking accounts:

How to get overdraft fees refunded

Although there are ways to avoid overdraft fees, there may be times when an overdraft fee is incurred despite your best efforts. If that happens, follow these tips to get the fee waived or refunded:

Take advantage of account grace periods

Some financial institutions offer overdraft forgiveness. These programs, also known as overdraft grace periods, give you time to add money to your account to cover the overdrawn transactions. The length of time you have to make a deposit or transfer varies by bank, but you usually have until the end of the next business day.

Contact customer support

Although it may feel uncomfortable, the most effective way to get reimbursed for your overdraft fees is to contact the bank or credit union's customer support department. If you don't have a history of overdrawing your account, the bank may be willing to refund or waive the fee to keep you as a good customer.

Call the bank and explain that you overdrew your account. If there are extenuating circumstances, such as an illness or a delayed paycheck that caused the overdraft, share those details with the representative and ask for a refund. If the representative is unable to help you, request a manager or supervisor; be polite and courteous, but don't be afraid to request additional assistance.

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