How to Fight Late Fees & Overdrafts
Credit card late fees and bank overdrafts suck. I have 4 checking accounts and three credit cards. Before I get ripped for admitting that as the author of a personal finance site, let me quickly explain. I have two checking accounts at two different banks, two for personal use and two that I share with my wife. Why two banks? I fully expect one of the banks to go public someday, and I want to have holdings there in the event that they do (you can actually buy discounted shares when this happens).
The three credit cards can be boiled down to one for myself, one I share with my wife, and a third because it basically offered me a free flight and has no annual fee. I don’t carry a month-to-month balance on any of the cards, and only use credit cards in a way to better my financial situation .
Oops, I’m Late. More Credit Card Late Fees!
The one problem with carrying this many financial accounts is that from time-to-time it is quite possible that you neglect to re-balance your account. Perhaps a payment reminder ends up in your spam filter or your payment doesn’t process on time. The result is a bank overdraft or a credit card late fee. This has happened to me four times, at a $25 fee per occurrence. However, I ended up not paying a dime for my mistakes and you shouldn’t either.
Why Banks and Credit Card Companies Should Waive your Late Fees
First, let’s be clear. This strategy may not work for everyone. If you have a history of over-drafting or missing your credit card payments and don’t have strong credit, you’re probably not going to be able to talk the customer service rep into waiving your late fees.
Second, if you owe a lot of money on your card, you’re probably not going to get a break.
Third, if you try to take advantage of a financial institution’s forgiveness and become a common repeat offender, they are much less likely to be accommodating.
On the other hand, if you have a history of good credit and on-time payments, you should be able to get away with these annoying fees. Here’s why: these financial institutions have no leverage to keep you around if you’re not happy with their service, and the advertising fees they pay to acquire a new customer are much higher than the $25 fee they’re getting from you. If they don’t bend over backwards to keep you happy, there’s hundreds, if not thousands of other institutions for you to take your business to.
How to Get your Bank Overdraft Waived
- Rep: Thank you for calling Your Local Bank, my name is Friendly, how may I help you?
- You: Hi Friendly. I just noticed that I over-drafted on my bank account. I feel horrible and would like to resolve this immediately. May I send in a check or cash to get this
taken care of?
- Rep: Absolutely. Here’s our address.
- You: Thanks, Friendly. This never happens to me, I noticed that there’s a fee on my account for this, is that correct?
- Rep: Yes it is. Let me look at something real quick. OK, we can waive this fee for you because you don’t have a history of overdrafts.
- You: Gee, thanks Friendly. You’re the best. You have a wonderful day.
If you have to directly ask for them to take off the fee, don’t feel ashamed in it. Others do it all the time. They’ll most likely give it to you. If they don’t, maybe it is time to find another bank, or at least have a talk with their manager first.
Update: There have been new bank overdraft protection rules put in place by Congress that should help you limit your overdraft fees. Banks will now ask you if you’d like to have the service of not running out of funds when you overdraw. If you decline the “service”, your charge simply won’t go through and you won’t have to pay an overdraft fee.
How to Get your Credit Card Late Fee Waived
- Rep: Thank you for calling Your Credit Card Company, my name is Slightly Less Friendly, how may I help you?
- You: High Slightly Less Friendly. My credit card stopped working, so I went online to check my balance and noticed that I missed my payment. I’m really embarrassed about this and would like to take care of it immediately. In fact, I just submitted my payment online before I called you. Should my card start working now?
- Rep: Let me check. It looks like your transaction has processed. It usually takes 2-3 business days to reflect in your account and your card will be active at that time.
- You: Thank you. I don’t know how I missed this, I always pay on time. Could you find it in your heart to waive the late fee for me?
- Rep: Let me look. I do see that you have a history of paying on time, so I am able to waive the fee for you this time.
- You: Gee thanks. You have a great day.
The credit card company is usually slightly less accommodating than the bank when it comes to waiving these kinds of fees, but they shouldn’t give you too hard of a time. If they do, it may be time to find a new credit card company. Threaten to leave, and you’ll usually get results. It costs credit card companies over $100 to acquire a new customer.
Being Honest, Friendly, and Responsible Pays Off
If you have a good financial history, own up to your mistake, and use kindness versus intimidation, there should be no reason why you have to pay these annoying late fees. Don’t be afraid to ask, you’ll usually get what you want. If not, look for a customer friendly institution to move your business to.