Bank and credit card fees are a $200 billion industry in the U.S. annually. In 2019, U.S. banks collected more than $11 billion in overdraft-related fees alone — including standard overdraft, non-sufficient funds fees, and a number of other overdraft varieties — according to the Consumer Protection Financial Bureau. Unfortunately for consumers, that total is shaping up to be higher for the year of 2020.

Cushion — an artificial intelligence-enabled web app that automatically negotiates bank and credit card fees on behalf of its users — reports that the average combined bank fees and credit card interest charges per person per month has increased from $106.70 in March 2020 to

$130.60 in August, with just a slight dip in April. The average fees per person per month is currently the highest it’s been since the company’s launch in 2018, Cushion says. For overdraft fees, the average has more than doubled, up from $34 per person per month in April 2020 to

$71 in August.

So what exactly is an overdraft fee, why are they so easy to obtain, and what can you do to minimize your chances of getting one? Read on to learn more.

What Is an Overdraft Fee?

When you don’t have enough money in your bank account to cover a debit purchase, ATM withdrawal, online payment, or transfer but your bank decides to cover the transaction, you will incur an overdraft fee. In order to overdraft, you must be opted into overdraft protection; however, even if you aren’t opted into the protection, you can still overdraft your account on pre-authorized transactions, such as checks and automatic payments.

You can get a fee by overdrafting your account by merely a few dollars, though some banks allow customers to overdraw by up to $5 without charging a fee. It can be quite simple to overdraft your account if you don’t pay attention to your account balance or scheduled payments — meaning a single transaction could slip under the radar and cause you to go into the negative on your very next purchase.

However, there are steps you can take to minimize your chances of overdrafting your account.

How to Minimize Overdrafts

• Be aware of your balance and charges. Although it may seem obvious, keeping an eye on past and future transactions is one of the easiest ways to avoid overdraft Sign up for alerts or low-balance notifications — available through many banks via mobile app or online — to notify you when your funds are low or if you’ve overdrafted.
• Reevaluate your use of overdraft Believe it or not, opting into overdraft protection is not the default option. In 2010, the FDIC mandated that banks require

customers to opt in before charging overdraft fees. And for good reason: According to a 2014 study by the Consumer Financial Protection Bureau, opted-in accounts pay on average $21.61 per month on overdraft and NSF fees while accounts not opted in pay only $2.98 per month. If you don’t have many essential bills to pay, you’re trying to manage your spending, or you’re an avid user of mobile banking or text message alerts, consider not opting into overdraft protection.

On the other hand, opting in can be beneficial when you’re in a financial bind. It’s important, though, to choose the right protection plan for you. Banks tend to offer a standard overdraft protection plan, which charges you on average $34.21 per overdraft transaction according to Cushion’s analysis of more than one million overdraft fees.

There are also plans that allow you to link another checking account, savings account, credit card, or line of credit should you overdraft. You will often still incur a fee for these linked-account transactions, however the fee is typically smaller than it would be if you opted into standard overdraft protection.

• Sign up for a fee negotiation service. There are several mobile or web apps that will negotiate fees on your behalf, including Founded by Paul Kesserwani in 2016, this San Francisco-based app was the first of its kind to leverage artificial intelligence, advanced fee-detection technology, and bank-level encryption to launch negotiations with all 15,000 U.S. banks and credit unions. The app negotiates fees of all kinds including overdraft and ATM fees, service charges, credit card interest, and more. To date, Cushion has recovered more than $3 million in refunds for its users.

Since March 2020, Cushion has onboarded tens of thousands of users to its new platform, and many are singing its praises across social media.

“Y’all laugh, but they recently turned over $700 in fees for me from my bank,” one customer commented on Facebook. “This app is perfect for people who don’t have time to dispute in a timely manner.”

For another customer who had already paid off his credit card balance, Cushion was able to retroactively negotiate the interest that had accrued on his card. In turn, his financial institution deposited his refund directly into his account.

“This is legit,” he commented on Facebook. “I received close to $800 back from one card on interest alone. I’d recommend this to anyone.”

The Bottom Line

If you take the time to properly prepare by setting up notifications and considering your overdraft protection options, there are ways to avoid getting stuck with an overdraft fee. Unfortunately, these penalties can still be inevitable. The key here is to stick up for

yourself and take back control of your finances, either by calling up your financial institution yourself or signing up with a service to handle the negotiation for you.

Negotiating bank and credit card fees can be a time-consuming, exhausting, and often frustrating process. The benefit of signing up for a fee negotiation service is that you hand off the hassle and free up your time to take care of other essential tasks.

(Syndicated press content)