HOUSTON - Banks charged customers record overdraft fees during the pandemic as many families struggled to pay bills.
A Bankrate survey found Houston has the third-highest average overdraft fees in the country at $35.17. Plus the average ATM fees in Houston are the sixth-highest at $4.95.
If you don't have enough money in your checking account to cover a transaction, you can get hit with a hefty overdraft fee. The national average is now up to a record $33.58.
"If you have repeated overdrafts throughout the year, some banks have a tiered structure. So the third fourth or fifth overdraft could cost even more than the first one," said Greg McBride, Senior Vice President for Bankrate.com.
At a Congressional hearing this year, some lawmakers called these fees predatory, as low-income customers and people of color pay the most in these fees. Representative Carolyn Maloney reintroduced the Overdraft Protection Act to limit fees to one a month, or six a year.
Meantime, several banks are starting to drop them.
"In recent years, we have seen banks taking various steps to head off any regulatory or legislative action," explained McBride.
Ally Bank, Alliant Credit Union, Discover, NorthOne, and Regions Banks have said they're dropping the charges. Amegy Bank just announced a no-overdraft-fee bank account.
If your bank still has overdraft fees, you can avoid them by checking your balance before you spend.
"That check that you deposited yesterday might not be available for withdrawal today," said McBride.
You can also avoid them by signing up for overdraft protection that links your checking account to a line of credit or savings account.
"So that if you overdraw, it's your money, not the bank's money, that covers that shortfall. That’ll save you the overdraft fee," he said.
Bank of America just introduced Balance Connect, where customers can link up to five Banks of America accounts to a checking account, enabling transfers for a $12 dollar fee.
Or choose a bank, credit union, or fintech company that doesn't charge overdraft fees or offers a grace period, such as Axos Bank, Chime, Discover Bank, Huntington Bank, or NBKC bank.
If you do receive overdraft fees, you can also call the bank, explain what happened, and ask them to waive it. Banks often will remove one or some of the fees because they want to keep you as a customer.