Overdraft fees can cost Canadian bank customers hundreds of dollars annually. If you've been charged even one $45 NSF fee per month, that adds up to $540 yearly. Learning how to get overdraft fees refunded and implementing prevention strategies can save you significant money while improving your personal finance management.
Key Takeaways
- Contact your bank within 24-48 hours for the best refund chances
- Prepare documentation and speak politely but firmly
- Escalate to supervisors if the initial request is denied
- Disable overdraft coverage to avoid fees entirely
- Set up low balance alerts and monitor the account daily
- Consider Bree's $2.99/month alternative vs $45+ overdraft fees
- Banks aren't required to refund fees, but often will for loyal customers
- File FCAC complaints if banks refuse reasonable requests
- Switch to banks with eliminated overdraft fees if problems persist
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What are Overdraft Fees & When Do They Occur?
Overdraft fees occur when your checking account balance falls below zero and your bank covers a transaction that exceeds your available funds. Most banks charge between $35 and $50 per overdraft, making these among the highest fees that financial institutions impose.
Common Triggers:
- Debit card purchases exceeding your available balance
- Automatic payments when you don't have enough funds
- Personal checks that process when insufficient funds exist
- Pre-authorized payments that overdraw your account
The average overdraft fee in Canada ranges from $35 to $50 per transaction, and many banks charge multiple fees per day if your account is overdrawn repeatedly.
3 Steps to Take
1. Don't opt in for overdraft
The easiest way to avoid overdraft fees is to ensure that you don't have the opportunity to incur them. If you have overdraft protection activated (you do if you can make purchases when your account balance is zero or below zero) without protection, you could be paying up to $35-$50 per transaction that you make.
Even if you have overdraft protection and you're buying a meal at McDonald's, your fee could be up to $5 / transaction, in addition to a $5 monthly fee. Below is an exhibit to show you how much overdraft fees can cost you over a day if you're making only normal purchases.
In the example above, you're paying $80 for $60 worth of goods! While the $20 fee might not seem like a lot, you could be spending hundreds or thousands of dollars on these fees over a year
Our advice? Unless you need it, call your bank and turn off your overdraft. Using Bree, you can get an interest-free advance of up to $100 instead of paying $5 for every purchase that you make. It will also curb your spending. Don't spend money you don't have!
2. Try to get NSF fees refunded by calling your bank
It might seem impossible for you to get your fees waived by the banks, but remember that you are a valuable customer, and it's in their best interest to keep you! If you've been getting hit with a lot of NSF fees in the past couple of months, we recommend that you do the following:
1. Summarize the fees - Count up all of the overdraft fees and other bank fees you've been charged. Be aware of the date you were charged and the corresponding fee amount. Email us at info@trybree.com if you would like a copy of this - we can provide it for you.
2. Prepare a script - Once you have all of the fees, prepare a polite but firm script (we've provided one below) that outlines all the fees you've been charged and that you've been a loyal customer who would like to have the fees refunded.
3. Contact your bank and be persistent - Stay persistent in your request for refunds. Banks do not want to lose you as a customer.
3. Be communicative with your lenders
If you have payday loans or any other installment payments, be sure to communicate if the money is going to arrive later than expected. If your pay is coming in a bit later than that day, or even the next day, email the organization you owe and let them know. Remember that the other side is charged an NSF fee when your payment bounces, so it's in their best interest that NSF fees are avoided.
Will it always work? No, but it's worth a shot. If you could send an email to save up to $50, wouldn't you?
Bank-Specific Overdraft Refund Policies
Different banks offer varying approaches to get your overdraft fees waived:
Major Canadian Banks
TD Bank: Offers overdraft relief programs where fees may be refunded if you restore your account balance within one business day.
RBC: May waive fees for loyal customer relationships, especially for first-time occurrences.
Scotiabank: Offers grace periods, during which the bank covers small overdrafts without incurring fees.
BMO: Offers overdraft protection linked to savings accounts or credit products.
CIBC: Has eliminated overdraft fees for certain account types and offers free overdraft protection options.
How to Avoid Overdraft Fees
1. Disable Overdraft Coverage
The most effective way to avoid overdraft fees is to opt out of overdraft coverage entirely. Without this service, transactions exceeding your balance will be declined rather than processed with fees.
2. Set Up Account Monitoring
- Enable low balance alerts through online banking
- Monitor your account balance regularly
- Set alerts when your balance drops below a certain threshold
- Check your balance before making purchases
3. Use Overdraft Protection Wisely
Traditional overdraft protection links your checking account to a savings account or credit line. When overdrafts occur, the bank covers shortfalls by transferring funds from your linked account.
Costs to Consider:
- Some banks offer free overdraft protection
- Others charge transfer fees ($5-$10 per transfer)
- Credit union options often have lower costs
4. Choose Banks with No Overdraft Fees
Some financial institutions have eliminated overdraft fees or offer generous grace periods:
- Essential banking accounts with built-in protections
- Online-only banks offering free overdrafts
- credit union alternatives with member-friendly policies
Alternative Solutions: Bree Cash Advance
Instead of risking expensive overdraft fees, consider Bree's cash advance service:
Bree vs. Overdraft Fees:
- Cost: $2.99/month vs. $45+ per overdraft
- Amount: Up to $500 advance vs. limited overdraft coverage
- Flexibility: 65-day repayment vs. immediate account replenishment
- No Fees: Zero interest and no late fees vs. compound overdraft charges
Example Savings: Traditional overdraft scenario: $20 purchase triggers $45 fee = $65 total cost Bree alternative: $2.99 monthly subscription for multiple advances = significant savings
FAQs
Can I get all my overdraft fees refunded?
While possible, banks typically limit refunds to first-time occurrences or exceptional circumstances. Success depends on your relationship history and the reason for overdrafts.
How often can I request fee refunds?
Most banks will consider refund requests once or twice per year for established customers. Frequent requests may result in denials.
What if my bank refuses to refund the overdraft fees?
Consider escalating the issue to supervisors, filing regulatory complaints, or switching to a bank that offers better customer service and more favourable fee structures.
Do overdraft fees affect my credit score?
Direct overdraft fees don't impact credit, but accounts closed due to persistent negative balances may be reported to credit bureaus.
Should I keep overdraft protection or disable it?
This depends on your financial habits. If you frequently overdraw, protection prevents declined transactions but incurs additional costs. If you rarely overdraw, disabling coverage can save you fees.
Take Control of Overdraft Costs
Refunding overdraft fees requires preparation, persistence, and strong customer relationships. However, prevention remains the best strategy. Whether through traditional overdraft protection, better account monitoring, or modern solutions like Bree's cash advance service, you have options to avoid these costly fees entirely.
Remember: banks charge these fees because they're profitable, not because they're necessary. By understanding your rights, implementing prevention strategies, and choosing the right financial tools, you can significantly reduce or eliminate overdraft costs from your budget.
Ready to avoid overdraft fees entirely? Consider Bree's interest-free cash advance as a smarter alternative to expensive bank overdrafts. Sign up now.
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