Wells Fargo, one of the largest banks in the United States, allows customers to overdraft their accounts up to certain limits. This means customers can withdraw or make purchases exceeding their available balance, and Wells Fargo will cover the overage. However, overdrafts come with fees that can add up quickly.
Wells Fargo’s overdraft practices
Wells Fargo will authorize overdrafts for checks, automatic bill payments, and other transactions made using your checking account number. The bank will also authorize overdrafts for ATM withdrawals and everyday debit card purchases, unless you opt out of overdraft services for those transactions.
When an overdraft occurs, Wells Fargo charges a $35 fee per overdrafted transaction (with a maximum of three overdraft fees per day). These fees apply regardless of the overdraft amount. For example, overdrafting by $5 or $100 both incur a $35 fee.
Overdraft limit
Wells Fargo does not publicly share a set overdraft limit. The amount customers can overdraw varies based on factors like account history and direct deposits. Wells Fargo will generally cover reasonable overdrafts by approved customers if the account is in good standing.
According to customer service representatives, Wells Fargo’s internal overdraft limit ranges between $100 and $500 for most customers. Those with steady direct deposits may get approved for higher overdraft limits between $500 and $1000. However, representatives stress that approved limits depend on an evaluation of each customer’s account.
Fees and interest charges
In addition to the $35 paid each time you overdraft, Wells Fargo will charge the following for overdrawn accounts:
- Extended Overdraft Fee – $6 daily fee charged if the account stays overdrawn by any amount for 4 or more days (up to $30 maximum per month)
- Overdraft Rewind Fee – $90 fee charged if overdraft protection transfers funds from a linked account or credit card more than 3 times in 12 months
- Overdraft Interest Charge – An annual interest rate of 18% charged on any overdraft balance after the account has been overdrawn for 35 consecutive calendar days
These fees are on top of the $35 overdraft fees, further increasing costs for customers who overdraw their accounts.
Impact of fees if overdraft limit is maxed out
If a customer continuously overdrafts up to Wells Fargo’s maximum limit, fees can quickly accumulate:
| Overdraft Limit | Fees if Limit is Reached |
|---|---|
| $100 |
|
| $500 |
|
| $1000 |
|
As shown, maxing out a $500 overdraft limit could result in up to $345 in fees, on top of the overdrawn balance that still needs repayment. And that’s not including additional interest charges on balances overdrawn more than 35 days.
How to avoid overdraft fees
The best way to avoid Wells Fargo’s overdraft fees is to closely monitor your account balance and only spend what you have available. However, if you occasionally overdraft, here are some tips to reduce fees:
- Opt out of overdraft services for ATM withdrawals and everyday debit card purchases. This prevents fees on small overdrafts when making purchases.
- Link a savings account or credit card to cover overdrafts when funds run short. This incurs lower fees than overdrafting from your checking account.
- Sign up for account alerts to receive notifications when your balance becomes low.
- Make a small deposit to cover an overdraft before the end of the business day.
Consider switching to an online bank such as Ally, which does not authorize overdrafts without customer consent and charges lower fees when overdraft protection is triggered.
Conclusion
Wells Fargo authorizes overdrafts up to an internal limit based on your account history – usually $100 to $1000 for most customers. Each overdraft transaction incurs a $35 fee, with additional fees charged if the negative balance remains outstanding. To avoid expensive overdraft fees, closely monitor your account balance, opt out of overdraft services when possible, and utilize other tools to prevent overspending your available funds.