Can Banks Charge Overdraft Fees On Pending Transactions?

Banks often charge customers overdraft fees for pending transactions. Is it legal or ethical to charge them? Can banks charge overdraft fees on pending transaction? The answer is yes, and we have some tips for how to guard yourself and your finances.

Banks usually charge customers overdraft fees when they don’t have enough funds in their accounts to cover a transaction.

This happens because banks want to discourage customers from using debit cards too much.

Can Your Bank Actually Charge Overdraft Fees On Your Pending Transactions?

Yes, your bank can charge overdraft fees on outstanding transactions, even though it does not reflect on your available balance.

This is because banks do not want to lose money on transactions that are pending, and hence, they charge overdraft fees on such transactions.

The reason behind charging overdraft fees on pending transactions is simple – it helps banks to recover losses incurred due to fraudulent activities.

Banks usually charge overdraft fees on transactions that are pending for various reasons. Some of the most common reasons include:
  1. Transactions that are pending for more than 24 hours.
  2. Transactions that are pending within 24 hours but exceed the limit set by the bank.
  3. Transactions that are pending during banking hours but exceed the limit.
  4. Transactions that are pending outside banking hours but exceed the limits.
  5. Transactions that are pending on weekends and holidays.

What are Overdraft Fees Exactly?

Overdraft fees are fees charged by financial institutions against customers’ accounts when a customer attempts a transaction without having enough funds in his or her account.

They’re usually around $25-$35 per incident, and can easily rack up to hundreds of dollars if the bank or credit card issuer tries to process the transaction again.

Overdraft fees totaled just under $34 billion in 2017 alone, according to data from the Federal Reserve Bank of New York.

What Precautions Can You Take?

Overdraft fees are one of those things that we don’t really think about until it happens to us. But what do you do when you find yourself facing a $35 overdraft charge?

You might feel helpless because it isn’t much you can do about it. However, there are some steps you can take to protect yourself against such charges.

The first thing you need to know is that most banks offer overdraft protection. In fact, many banks automatically cover up to $250 per month. So, if you are charged an overdraft fee, chances are good that your bank will reimburse you.

However, if you want to avoid being hit with an overdraft fee, you’ll need to make sure you’re aware of how your bank works. Here are some key points to keep in mind:

  • Most banks will allow you to preauthorize certain types of transactions. For example, if you use a credit card to pay off your balance each month, you probably won’t incur an overdraft fee.
  • Some banks will let you set limits on how much money you spend in a given period of time. For instance, if you typically spend less than $100 per week, you could set a limit of $50 per week. If you exceed that limit, you might be subject to an overdraft fee. Of course, setting a spending limit doesn’t guarantee that you won’t incur an over-drafted fee.
  • Many banks will allow you to opt-out of overdraft coverage altogether. To do this, simply call customer service and ask for the “overdraft protection” option.
  • If you have multiple accounts, you might be able to combine your accounts into one large account. This way, you’d only be responsible for one overdraft fee.

How to Avoid Being Charged for Overdraft Fees

How To Avoid Being Charged For Overdraft Fees

Overdraft fees are one of the worst nightmares of every consumer.

They are charged on transactions done against your checking account without your consent.

Overdraft charges vary depending on the amount involved, type of transaction, number of overdrafts, etc., but it is always better to avoid overdrafts altogether.

Here are some simple ways to avoid overdraft fees:

1. Know Your Account Limits

You must know how much money you can spend each month. If you exceed your limit, you could face a penalty.

You can find out your monthly spending limits by contacting your bank.

2. Keep Track of Your Transactions

If you notice that you are exceeding your spending limit, try to stop yourself from making unnecessary purchases.

Also, keep track of your expenses. This way, you can easily spot where your money goes.

3. Pay Bills Online

Pay bills online rather than paying by check.

Many banks offer bill payments online, and you don’t even have to go into your branch.

How do Banks Assess Overdraft Fees?

Overdraft fees are charged by many financial institutions when a customer makes a purchase that exceeds the balance in their checking account.

These fees can add up quickly, especially if you don’t realize that you’re being hit with excessive fees.

In fact, some people say that they’ve been hit with over $1,500 in overdraft fees just because they forgot to check their balances.

The problem is that most people aren’t aware that there are ways to avoid paying these fees.

For example, if you make a transaction that goes into negative territory, you might think that you’ll incur an overdraft fee. 

However, you could actually end up avoiding the fee altogether. Here’s how it works:

When you make a debit card payment, the bank automatically debits your checking account. If you exceed your balance, the bank will pay the money out of your account, but it won’t deduct the fee.

This process happens almost instantaneously, so you probably wouldn’t even notice that the transaction went through.

But if you don’t have enough money in your account to cover the transaction, the bank will hold onto the money until you deposit another dollar.

Final Thoughts

Overdraft fees are annoying at best, and they can ruin your day. Fortunately, there are several things you can do to reduce or eliminate these fees. By following these tips, you should be able to avoid getting hit with an overdraft charge.

By Lauren Hunter

I'm Lauren, and I've been on a journey to earn money and save money for most of my life. As the editor-in-chief of, and as a freelance writer, coach, musician, and entrepreneur, I love looking for new ways to make money and better ways to keep it. I'm also a wife and work-at-home mom (WAHM) to four kids, so budgeting is my middle name. I'm excited to be on this money journey with you!