Opting into overdraft protection with your bank is like stringing up a financial safety net. With that protection in place, you can cover essentials like your car payment, rent, or groceries — even when your
account balance is too low.
But that coverage often comes at a price. Many banks and credit unions charge an
overdraft fee each time you overdraw your account, and it’s
usually around $35. If you’re already having trouble keeping your balance in the black, these extra fees will make it extra hard to keep your finances on track.
Want the protection without the added costs? First, let's talk about what an overdraft fee is and what to look out for. Then you can check out these nine banks with no overdraft fees.
What’s an overdraft fee?
Say you get a flat tire that needs replacing and decide to buy a whole new set. The total comes to $400. You swipe your debit card at the register, forgetting you only have $300 in your deposit account. But since you’ve opted into overdraft protection, the transaction goes through and you drive off on a new set of wheels.
Your account is now overdrawn, leaving you with a
negative account balance of -$100. You realize your mistake and remember you have $120 in cash in your wallet, so you rush to the ATM to make a deposit. That should leave you with $20 in your account.
But that won’t be the case if your bank charges overdraft fees. They’ve covered the $100 difference between the cost of the tires and the balance you had when you made the purchase, but they’ve tacked on a $35 fee for the inconvenience, leaving you with -$15.
The fee might not show up right away, so for a little while, you don’t realize you’re still in the red. On the way home from the ATM, you stop by the store for a $4 gallon of milk. The bank covers that transaction, too, charging another $35 fee for the second overdraft. Now you’re left with -$54 in your checking account. A day later, when the bank clears your $600 rent check, you get hit with yet another overdraft fee, dropping your balance to -$689.
You can see how these fees add up quickly. And while it’s better to pay a fee to process checks, ATM transactions, and card purchases than to get charged a
returned item or
nonsufficient funds (NSF) fee for a declined transaction that leaves you empty-handed, it’s hard to stop a debt cycle once it starts.
Overdraft policies: What to look for
You’ll find plenty of banks that allow overdrafts at no cost — and we’re about to share nine of our favorites with you. But everyone’s situation is different, so it’s important to think about your needs before opening a new account. Do you make enough large purchases that you need a bank with $500 in overdraft protection? Are you likely to need a bank that lets you overdraft again immediately after the first overdraft transaction clears?
Dig into the details to see how the institution’s policies mesh with your spending habits and how they’ll impact your day-to-day finances. Here are a few key things to look for.
Low-cost options with clear fee structures
Some banks and credit unions offer “free” overdrafts, but only if your account meets certain conditions. Look for accounts with transparent fee structures so you know exactly what to expect and what you need to do to keep the protection free.
Overdraft limits and protection services
Make sure you’re up to speed so you don’t wrongly assume your safety net is wider than it really is. Overdraft protection won’t do you any good if your transaction is $500 and the bank’s overdraft limit is $50. And if the protection is only available when you have enough money in a linked account, you’ll need to consistently maintain a savings balance big enough to fall back on.
Fee waiver and alert options
Even if your bank doesn’t offer free overdraft protection, you might be able to get the fee waived, especially if it’s your first time overdrafting the account. You can also avoid extra fees by looking for a bank that lets you customize account alerts so you’ll have a heads-up when your balance is running low.
9 banks with the best overdraft protection
1. Ally Bank Spending Account
Pros
No overdraft fees.
Two free ways to cover an overdraft.
Overdraft buffer up to $250.
Two weeks to bring the account back to a positive balance.
Cons
1. Alliant Credit Union
Pros
Cons
2. Axos Bank Rewards Checking
Pros
Cons
3. Capital One 360 Checking® Account
Pros
Cons
Any overdrafts allowed must be paid back immediately.
May only cover checks, electronic (ACH) payments, or recurring debit card payments.
4. Citizens Bank
Pros
No overdraft fees for transactions of $5 or less.
For transactions greater than $5, no overdraft fees if the account is brought back to a positive balance by the next business day.
Cons
5. Discover® Cashback Debit Account
Pros
Cons
6. Quontic Bank
Pros
Cons
7. Truist
Pros
No overdraft fees.
$100 Negative Balance Buffer for eligible clients.
Two overdraft fee-free account types to choose from.
Monthly maintenance fee waived for students under 25.
Cons
No formal overdraft protection, so most transactions not covered by the Negative Balance Buffer will still be declined.
Must be a student under 25 or meet certain conditions to waive $12 monthly maintenance fee.
Help avoid overdrafts with EarnIn
An overdraft fee-free bank isn’t the only way to put a safety net in place. EarnIn, the original same-day pay app, offers many
tools to make the most of your money and help you avoid overdrafts in the first place.
Download EarnIn to take advantage of our
Cash Out tool, which lets you access your pay as you earn it — up to $100 a day and up to $750 every pay period. Then, set up
Balance Shield to get an instant alert if your bank balance drops below the level you set. You can even get a $100 transfer from your on-demand pay to keep your balance from dropping into overdraft zone.
Download EarnIn and help protect your bank balance now.
1. EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out.. Subject to your available earnings, Daily Max and Pay Period Max. EarnIn does not charge interest on Cash Outs. EarnIn does not charge hidden fees for use of its services. Restrictions and/or third party fees may apply. For more info visit earnIn.com/TOS.
2. Balance Shield cash out is subject to your available earnings, Daily Max and Pay Period Max. Other restrictions and/or third-party fees may apply. For more information visit
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