Last updated June 23, 2021
What Is an Overdraft Fee?
There are two types of Chase overdraft fees: insufficient funds fees and returned item fees. An overdraft occurs when you try to complete a transaction but you do not have enough money in your account to cover it. The difference between insufficient funds fees and returned item fees are how Chase Bank handles the overdraft fee.
- Insufficient funds: You don’t have enough funds in your account, but Chase decides to pay for the transaction anyway
- Returned item: You don’t have enough funds in your account, so Chase decides to decline the transaction
Chase is able to automatically approve insufficient funds transactions on checks, automatic payments, and recurring debit card purchases if you do not have enough money in your account to cover a transaction. In order for Chase to cover everyday debit card transactions (e.g. groceries, gas, dining out), you must first opt into overdraft protection.
Chase is not obligated to cover any transactions that overdraft your account, regardless of transaction type or overdraft protection status. The decision is ultimately at the bank’s discretion.
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How Much Does a Chase Overdraft Fee Cost?
If you overdraw your account by more than $5, Chase can charge you either an insufficient funds fee or returned item fee. Chase overdraft fees, not matter which kind, both cost $34 per transaction.
You cannot be charged more than three insufficient funds fees or returned item fees combined per day, which is a total of $102 in potential overdraft charges.
You can take advantage of Chase overdraft protection, where the bank automatically transfers funds from a qualified linked account in the event of an overdraft. Qualified accounts that you can link include:
- Chase checking accounts and savings accounts
- Chase lines of credit
- Chase credit cards
If you overdraft your account but are covered by overdraft protection, Chase will transfer funds from a savings account or checking account, or cover the transaction with a credit card or line of credit — free of charge.
Chase also provides thorough “posting order” guidelines in their fee schedule. Knowing what order transactions post to your account can help you avoid Chase overdraft fees and other untimely penalties. According to Chase, transactions are posted to your account in the following order:
- Adjustments from the previous day and deposits
- Transactions in chronological order by date and time of when the transaction was authorized or shown as pending (includes withdrawals via ATM or a Chase banker, transfers and payments, automatic payments, online or mobile transactions, checks drawn on your account, debit transactions, wire transfers, and real-time payments)
- Note: Chase specifies that if multiple transactions have the same date and time, they are then posted highest to lowest in dollar amount
- Overdraft protection transfers from a checking or savings account, or transfers to other accounts
If the same check or ACH (automated clearing house) item attempts to post on your account multiple times, you could be liable for both a returned item fee and an insufficient funds fee. For instance, if another bank attempts to clear a check under your name but you do not have sufficient funds in your account and Chase decides to decline the transaction, you will receive a returned item fee. If the other bank attempts to clear the check again and Chase allows the transaction to go through, you could be subject to an insufficient funds fee.
How to Avoid Overdraft Fees
Cushion monitors customers’ accounts for every type of bank and credit card fee — overdraft fees are the most commonly detected charge. Luckily, there are small actions that you can take to avoid them:
- Watch your account balance and charges.
- Sign up for low-balance notifications.
- Don’t opt into Chase overdraft protection.
- Opt into overdraft protection, but choose the right overdraft protection plan.
How to Get an Overdraft Fee Refund
Even if you end up with overdraft fees, you can work to get them reversed. You can contact customer service to negotiate a Chase overdraft fee refund, but there are a few things that you should keep in mind.
Prepare your personal information
When you contact customer service to see if they will waive Chase overdraft fees, have your essential information ready: name, address, bank account number, the fees that you’d like to negotiate, and possibly your social security number.
“Hello. My name is [your name], and I recently received an overdraft fee while using my card. I’m contacting you to see if you would be willing to refund this fee.”
How can Cushion help me?
Cushion Bill Pay gives you more visibility and control over your finances than ever before. Many people get hit with bank fees—such as overdrafts and late fees—due to cash flow problems. With Cushion, you can consolidate and track all of your bills and BNPL payments in one place, plan your budget by reviewing what’s coming down the pike, and avoid overdraft fees by temporarily pausing payments that might overdraft your account and resuming them when you are ready.
Have your points of leverage ready
Have you been financially affected by COVID-19? Are you a loyal customer who has banked with Chase for an extended period of time? Do you have multiple accounts with them? Do you make regular deposits? Is this overdraft a rare occurrence?
Be patient, persistent, and prepared not to get a refund every time
A little kindness goes a long way. The Chase customer service representative that is working on your case likely didn’t write the rules on refunds. Remember to be patient and polite during your negotiation — it could play a significant role in whether you get the refund or not.
You should also remember that it’s okay to press the issue if you initially hear “no.” You’ve prepared your points of leverage for this very reason. If you have several arguments working in your favor, you may be able to nudge the representative to see things from your point of view. Sometimes, success depends on the representative that you speak with, so you can try calling back a few days later to speak with someone new.
Finally, you have to be willing to lose some negotiations. Occasionally, you may only earn a partial refund; other times you may not get a refund at all. Try not to get discouraged. Your account history plays heavily into whether or not you’ll receive a refund, so focus on taking the necessary steps to prevent overdrafts in the future.
Do Overdraft Fees Hurt Your Credit Score?
On their own, overdraft fees do not necessarily hurt your credit score. Your score is calculated using the information in your credit report, which is a compilation of all of the debts and credit accounts in your name. A credit account is any account that involves a financial institution or creditor lending you money.
As a checking account is a place for you to store your own money and not money borrowed from a creditor, the information in your standard checking and savings accounts will not appear on your credit report and affect your score.
However, if you overdraw your checking account and leave it in poor standing for a considerable amount of time, financial institutions may choose to forcibly close your account and send it to collections. Unfortunately, collections accounts do appear on your credit report and significantly impact your credit score.
If you do overdraw your checking account, it’s important that you bring your account balance positive as quickly as possible or contact your financial institution to learn more about your options so as to avoid serious financial damage.
More than just a bad mark on your credit report, a decrease in your score could result in difficulty securing loans and credit cards, as well as loss of access to certain banking services provided by Chase bank. By losing access to banking services, you may have difficulty opening a standard Chase savings account or checking account, or you may have to settle for accounts that come with a higher minimum balance and more fees.