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How do I get the Best Overdraft Rates?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 April 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Overdraft rates are rates associated with the overdraft protection offered by many banks around the world. Essentially, this type of service allows a bank to cover a check or debt card purchase even though the associated bank account may currently be short of funds. In exchange for this service, the bank assesses fees that are charged to the account along with the balance of the overdraft. Finding the best overdraft fees often means evaluating different levels of checking accounts offered by different banks and identifying which of the accounts offer the best insufficient funds rates overall.

One of the easiest ways to begin the process of identifying the best overdraft rates is to collect information on the standard rate schedules published by different banks. These public or standard rates are normally assessed when bank customers have not signed up for any special overdraft protection plan. Many banks will also provide details on reduced overdraft rate plans associated with specific types of checking accounts. Consider each of these account types closely and determine if the overall structure of a given account would be a good fit, and provide a competitive rate for the overdraft protection.

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A second approach is to schedule a meeting with your current banker to discuss obtaining reduced overdraft rates. For customers who have a considerable amount of assets placed with the bank, such as savings accounts, investment accounts and possibly several sizable certificates of deposit, the banker may be willing to attach a discounted overdraft rate to that customer’s checking account. The ability to offer this type of discount may be impacted by local or national banking regulations that limit the banker’s ability to provide any type of break on the standard overdraft rates currently in place, so the discount may be somewhat negligible.

When evaluating overdraft rates offered by different banks, make it a point to determine if there are any restrictions on the rates. For example, some banks may limit the stated rate to a certain number of instances within a specified time frame; any incidences above that number may be subject to additional penalties. At times, banks may offer a lower introductory rate that is good for a limited period of time, such as six months after the account is established. Once the introductory or honeymoon period is completed, the lower overdraft rates may be adjusted to higher standard rates. Should you find overdraft rates that are highly competitive, make sure they are yours to keep for as long as the account is open and that the list of circumstances that could trigger a rate increase are few and highly unlikely to occur in your situation.

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