How to wipe off your debt quickly this year

Overdraft fees cost Americans collectively over $27 billion per year, making them a significant part of customers' overall bank fee structure. In fact, the issue has garnered so much attention that even congress has enacted legislation to force banks to make customers more aware of their choice about whether to enroll in overdraft protection programs when applying for a new account.

How We Got Here

The current overdraft fee epidemic has its roots in two parallel phenomena: the rise of overdraft protection programs and the exploding use of the debit card.

Overdraft protection programs: as their name implies, these programs were ostensibly designed to protect customers from having their checks bounce or their debit transactions rejected. However, the reality is that these programs are not-so-secret moneymaking machines for the banks. That's because, while the bank will cover the overdrawn charge, they also turn around and immediately charge a hefty fee of $25 or more for the favor.

Debit cards: for customers with overdraft protection, banks will honor a pending debit card transaction even if the transaction would overdraw the account. All of this happens with no warning or signal to the bank customer. What this means is that you could go out shopping all day at multiple stores, come home, and have incurred 2, 3, 4 or more overdraft charges in one day without even knowing it (until you check your bank statement and see all of the fees there).

Where We're Going

Some recent congressional legislation has passed that aims to protect the bank customer from fees. For example, there is legislation that forces banks to tell account applicants about the implications of overdraft protection programs upon sign-up. Still, we know that banks are creative and wily in their search for more profits. It's clear that they will always be trying to find loopholes in the new laws so that they can keep charging big-time fees.

The Consequences of Unpaid Overdraft Fees

If you have incurred some overdraft fees that have not yet been paid, you need to make sure you pay them before leaving your current bank. Otherwise, your name may get reported to Chex Systems, which is a "risky bank customer" reporting system that banks use to inform each other about "problem" customers. Once your name is in Chex Systems, it can be hard to open a new account at most banks.

How to Get Help Paying Off Overdrafts at the Bank

The only one that is going to help you pay off the overdrafts, of course, is yourself. Here is how to get help paying off overdrafts:

1. Examine your bank statement carefully before calling the bank. Make sure you know the transaction amounts, date of transaction and vendor name related to the overdraft(s) before calling.

2. Be nice! The person at the bank whom you are talking to is just another person. You will attract more flies with honey . . . (you know the rest).

3. Just state the facts and avoid getting emotional. You have a much better chance of convincing the bank to refund your overdraft fee if you are polite and state a logical case for getting the money paid back to you.

If all of this seems like a lot of work and you just don't have time for it, consider your other option: switch to a bank that does not charge overdraft fees. In the personal banking market today, there are actually banks who will never charge you an overdraft fee - even if you overdraw your account. And, there are no penalties, either. If you are tired of paying overdraft fees, these banks are worth finding and switching to.