Overdraft fees are becoming less of a headache for many bank customers, as more banks are reducing or eliminating them. The trend comes amid increasing pressure from federal regulators and consumer advocacy groups to rein in overdraft fees, according to Bankrate’s latest Checking Account and ATM Fees Survey. Fees average more than $29 per transaction.
One bank that was ahead of the curve was Discover Bank, which has a history of not charging overdraft fees. Additionally, in 2019, we eliminated insufficient funds fees for all bank accounts.
Recently, a variety of large banks, online-only banks, and credit unions have announced plans to reduce or completely eliminate overdraft fees.
We’ve compiled a list of banks that offer no or reduced overdraft fees. This can help you save money if you overdraw your account.
What is an overdraft fee?
Overdraft fees are fees charged by your bank when you perform a transaction that causes your account to go into negative territory. The bank may allow the transaction to be carried out, but you will have to pay fees and replenish the negative amount to restore the account to good standing. In some cases, your bank may decline the transaction, especially if you make a debit card transaction without sufficient funds.
Some banks offer a 24-hour grace period where you can restore your account within 24 hours without being charged a fee. However, overdraft fees can be expensive, so to avoid them altogether, you may want to consider a bank that doesn’t charge overdraft fees. In some cases, banks with overdraft fees may link your savings account to your checking account so that you can withdraw from your savings if you overdraft your account.
Banks with no overdraft fees or reduced overdraft fees
Alliant Credit Union
Alliant Credit Union has stopped collecting overdraft and non-sufficient funds (NSF) fees in 2021. Members with accounts in good standing may be eligible for the Courtesy Pay program, under which the credit union will cover check or ACH electronic transactions that would otherwise go unpaid. You can. Due to lack of funds.
Alliant may also cover debit card transactions that would otherwise be debited from your account as part of our enhanced key money program. If your transaction is covered through the Courtesy Pay program, the full amount of your overdraft balance will be paid immediately.
Ally Bank
Ally Bank eliminated overdraft fees during the 2020 coronavirus pandemic. The online bank has since made this change permanent. The bank will not charge a fee if a transaction that overdraws your account is declined.
Ally also offers a CoverDraft service that provides a safety net of up to $250 on excess accounts for eligible customers. If you overspend, your next deposit will be automatically applied to your negative balance.
bank of america
Bank of America will stop collecting NSF fees in 2022 and lowered overdraft fees from $35 to $10. You can only be charged two overdraft fees per day. The bank also eliminated the $12 overdraft protection transfer fee through its Balance Connect linked account program.
Bank of America earned $392 million in overdraft and NSF fees in 2022, according to the Consumer Financial Protection Bureau (CFPB), the U.S. government agency that enforces federal consumer financial laws.
In July 2023, the CFPB announced that Bank of America had participated in illegal activities, including double-charging NSF fees. The CFPB ordered the bank to pay a total of $250 million in fines and restitution to resolve multiple claims.
BECU (Boeing Employees Credit Union)
BECU reduced overdraft fees from $25 to $10 in October 2022 and also eliminated NSF fees for items returned or rejected due to insufficient available funds.
BMO Harris
BMO Harris will eliminate NSF fees and overdraft transfer fees in 2022, cutting overdraft fees by more than half to $15 per transaction. Rate changes apply to both consumer and small business accounts. The maximum number of overdraft fees a customer can incur in a day is 3.
capital one
In early 2022, Capital One stopped collecting overdraft fees, eliminating an estimated $150 million annual revenue stream. Prior to that, the bank had been charging customers who enrolled in its next-day grace period program a $35 overdraft fee.
Customers can also choose alternative options, such as rejecting transactions that result in an overdraft, or transferring funds from a linked account in the event of an overdraft.
The bank also stopped collecting NSF fees in 2021.
citibank
In June 2022, Citibank eliminated fees associated with overdrafts, overdraft protection, NSF, and returns. This change makes it the largest bank to eliminate overdraft fees.
Having a linked savings account or Citi line of credit allows customers to automatically transfer funds to their checking account if their balance becomes negative.
citizen bank
Citizens Bank introduced an overdraft fee grace period in 2021, allowing customers with overdraft accounts to avoid overdraft fees if their account returns to a positive balance by the end of the next business day. Overdraft fees, if imposed, will be $35 per item paid and may be charged up to 5 fees per day.
One checking account offered by Citizens Bank is EverValue Checking, which may be a good option for those who don’t want overdraft protection. Transactions that overdraw your account will simply be rejected.
The Fifth Third Bank
In June 2022, Fifth Third Bank eliminated NSF fees on all consumer accounts. Our bank charges a $37 fee for each overdraft, with a maximum of 3 overdraft fees per day. These fees are not levied on individual items valued at $5 or less. Additionally, no fees will be charged for accounts overdrawn by $5 or less at the end of the business day.
huntington bank
Huntington Bank reduced overdraft and NSF fees to $15 per transaction in July 2022. The number of times a customer can be charged these fees has also been reduced to three times per day. The bank does not charge fees for accounts with excess withdrawals of less than $50.
key bank
In 2022, KeyBank lowered overdraft fees to $20 per transaction and limited the number of overdraft fees to three per day. If your account is overdrafted for less than $20, you will not be charged an overdraft fee and you will no longer be charged an NSF fee.
pnc bank
In 2022, PNC Bank eliminated NSF fees for all consumer savings account customers. The bank had already stopped charging these fees to virtual wallet deposit accounts in 2021.
Virtual Wallet customers also have access to a “Low Cash Mode” feature that limits overdraft fees to $36 once per day. Those using Low Cash mode also receive low balance alerts and at least a 24-hour grace period to add funds to avoid overdraft fees. During the grace period, you can also process or decline payments that may result in overdrafts and fees.
regional bank
In 2022, Regions Bank will eliminate NSF fees and cap overdraft fees at $36 per day, up to three times a day. The bank also no longer charges overdraft protection fees when funds are automatically transferred between linked accounts to cover an overdraft.
Additionally, the Region has instituted a Region Overdraft Forbearance. This grace period allows customers to return their account balance to $0 by the end of the next business day without incurring overdraft fees.
Santander bank
Banco Santander has increased its fee-free overdraft threshold to $100 in 2021, meaning that accounts that are overdrafted below that amount will not incur any fees. The bank has made additional changes to its overdraft fee structure, reducing the number of daily $35 fees it can charge on eligible overdrafts and returns, and when funds are automatically transferred between accounts. Eliminated the $12 overdraft protection fee. Avoid overdrafts. Then, in 2022, the bank also lowered overdraft fees from $35 to $15, helping to reduce overall fees paid by customers.
trust bank
Truist Bank currently offers two personal checking accounts with no overdraft fees. One is the Truist One account, which provides a $100 negative balance buffer to qualifying customers.
With the Truist Confidence Account, there are no fees for overdrafts, returns, or overdraft protection transfers. Transactions that exceed your account balance will generally be declined or returned.
Truist does not charge fees for overdraft protected transfers from linked savings, checking, money market accounts, or credit cards or lines of credit.
us bank
U.S. Bank will stop collecting NSF fees in early 2022 and increase the amount you can withdraw from your account without a fee from $5 to $50. Once the account has a negative balance of more than $50, customers have one full day to deposit funds to avoid fees. The overdraft fee that your bank pays on your behalf is $36 per item.
U.S. Bank earned $214 million in overdraft and NSF fees in 2023, according to the CFPB.
wells fargo
Wells Fargo eliminated NSF and overdraft protection fees in 2022 and also began offering customers a 24-hour grace period to cover overdrafts before fees are incurred.
The bank’s overdraft fees are $35 per consumer account, with up to three such fees per business day.
Wells Fargo earned $937 million in overdraft and NSF revenue in 2023, according to the CFPB.
What banks get from overdraft fees
Through 2023, banks earned $5.8 billion in combined overdraft and NSF fee revenue, compared to nearly $12 billion in revenue in 2019, according to the CFPB. This 51% decrease can be partially related to the bank’s policy change.
The CFPB report breaks down 2023 overdraft and NSF revenues by bank and lists JPMorgan Chase as earning the most ($1.1 billion), followed by Wells Fargo ($937 million). ), PNC Bank ($258 million), Trust ($231 million), US Bank ($214 million) and Regions ($211 million).
Bank fined for overdraft fees
In early 2022, the CFPB launched an effort to reduce so-called “predatory junk fees charged by banks and financial companies” by issuing industry guidance and developing and enforcing rules. The agency describes junk fees as “excessive,” and examples include overdraft fees, return fees, late payment penalties, and out-of-network ATM fees.
The CFPB accused Regions Bank of charging customers “unlawful surprise” overdraft fees on “certain ATM withdrawals and debit card purchases” from 2018 to 2021. He was ordered to pay $91 million, the agency reported. Regions said in a written response that it “does not agree with the CFPB’s characterization” but intends to pay the fees.
Similarly, Wells Fargo was fined $3.7 billion by the CFPB in December 2022 as part of its imposition of “surprise overdraft fees.” The agency alleged that the bank charged some customers fees even though there were sufficient funds in the account at the time the bank approved the transaction.
“What we can say with certainty is that unless there is oversight and enforcement by the CFPB and laws that not only eliminate overdraft fees but also level the playing field for people who are barely making ends meet, banks will not be able to overdraft. They’ll just rename the fee another junk fee, and the cycle will start all over again,” said Elise Hicks, a consumer policy analyst at Americans for Financial Reform, a nonprofit advocacy group.
Laws limiting overdraft fees
The Overdraft Protection Act of 2021, introduced by former Rep. Carolyn Maloney, a Democrat from New York, focuses on the CFPB investigation and would increase the amount and fees banks can charge for each overdraft fee. I tried to limit how often I could be billed.
The House Finance Committee passed the bill in July 2022, but Maloney lost a re-election bid later that year and the bill never advanced further in Congress.
Overdraft fees are a practice that President Joe Biden has also voiced opposition to. He advocated banning “junk fees” in his February 2022 State of the Union address, and later issued a statement saying his administration is “cracking down on unfair and hidden ‘junk fees’ like bank overdraft fees.” announced.
Critics of such laws argue that consumers who overdraw their accounts suffer more from having their transactions declined than from overdrafting their accounts and paying the resulting fees. There is. Todd Zywicki, a law professor at George Mason University, argued at a House Financial Services Committee hearing in March that regulatory intervention could ultimately harm consumers, especially those who are more vulnerable. He expressed his doubts.
If laws were enacted to eliminate or curb overdraft fees, people who overdrawn their accounts would experience “more dishonored checks, more rejected payments, and ultimately to payday lenders and other alternative financial institutions.” It is likely that we will have to rely more on bank rate.
What does it mean to you to have a bank with no overdraft fees?
Some banks with no overdraft fees will simply deny transactions that could potentially overdraft your account. If you want to avoid having your transactions declined, you may want to consider setting up overdraft protection. This service will automatically transfer funds from your savings account to your checking account to prevent you from overdrawing your funds.
If your bank currently charges overdraft fees and you want to avoid them, find another bank that doesn’t charge overdraft fees, as there is a growing list of financial institutions that are eliminating such fees. is easy.
Other factors that consumers commonly consider when shopping for a new bank include high-yield savings account interest rates and whether they offer a free checking account.
Various financial institutions, such as Varo Bank and Chime, also offer perks like access to direct deposits up to two days earlier than many traditional banks.
conclusion
Overdraft policies vary by bank, including whether they charge fees for overdrafts, deny overdrafts and don’t charge overdraft fees, or allow grace periods before charging fees. It’s helpful to look for banks that don’t charge overdraft fees and use tools like low balance alerts to avoid overdrawing your account.
–Freelance writer Sarah George contributed to updating this article.