How to Calculate a Bank Overdraft

To avoid embarrassing situations for customers at a cashier or store, banks instituted Overdraft Protection. A bank will allow a charge to go through if you don't have adequate funds, then tack on a large fee for the service, both of which you must pay immediately. If you consider the charges incorrect, you may want to calculate the overdraft charge.

Instructions

1. Contact your bank to determine the fee for each Non-Sufficient (NSF) or overdraft charge. Typically the fee ranges from $20 to $28 per charge.

2. Determine how many charges were made after the initial overdraw, then multiply that number by the overdraft fee. For example, if you made five purchases after overdrawing your account, and your bank's NSF fee is $20, multiply 5 by 20 to get $100.

3. Add up the total charges you incurred with every overdraft charge.

4. Add the fees and the charges together to calculate your bank overdraft.

Tips & Warnings

• If you consider the charges are too much, ask your bank to cancel your protection.

• You must pay your overdraft as soon as possible, or risk having your account sent to a collection agency or receiving a bad mark on your credit history.

References

• Investor words: Overdraft Protection
• Federal Reserve: New Overdraft Rules for Debit and ATM cards

Resources

• New York Times: Overdraft Protection: Why Bother?