A banks overdraft fees are one of the most frustrating charges that banks can levy, and they can be very difficult to avoid. If you’re not careful, you can easily find yourself paying hundreds of dollars in fees every year.
Fees from bank overdrafts have become to banking what baggage fees have become to airlines. A money maker for the industry, and an annoyance to the consumer. Making many wonder what is a banks overdraft fee, can banks waive overdraft fees, and are there any banks with no overdraft fees?
I will answer those questions and more throughout this article. Spend the time and read through the whole article , search the table of contents for topics you are most interested in, or read the FAQ’s at the end of the article. Most importantly you will learn everything you need to know about bank overdraft fees, how to get them waived, and how to avoid them moving forward.No minimum, monthly, or overdraft fees˜. Ever. Get started with Chime—Signing up takes 2 minutes!
What Is a Bank Overdraft Fee?
When you have a bank account, you may be able to spend more money than you have in your account. This is called an overdraft, and it can happen if you write a check for more money than you have in your account, or if you use your debit card to make a purchase when there isn’t enough money in your account to cover it.
The bank overdraft fee can be as high as $35, and it can quickly add up if the customer doesn’t have the funds to cover the charge. Many people are not aware of these fees until they see them on their statement, and by then, it’s too late.
There are a few ways that you can avoid overdraft fees.
How to Avoid Banks Overdraft Fees?
- The first way is to keep track of your account balance. You can do this by checking your account online or by calling your bank. If you know how much money you have in your account, you can avoid spending more than you have and being charged an overdraft fee.
- Another way to avoid a banks overdraft fees is to set up account alerts. Many banks offer the option to receive text or email alerts when your account balance gets low. This can help you avoid spending more money than you have and being charged an overdraft fee.
- Finally, you can avoid bank overdraft fees by linking your checking account to a savings account or a line of credit. If you have money in another account, your bank can transfer money into your checking account to cover any overdrafts. This can help you avoid being charged an overdraft fee.
- Overdraft fees can be avoided by taking a few simple steps. By keeping track of your account balance, setting up account alerts, and linking your checking account to another account, you can avoid being charged an overdraft fee.
But what is the BEST way to avoid overdraft fees? It is actually the simplest answer, and that is to avoid a bank that charges an overdraft fee to begin withNo minimum, monthly, or overdraft fees˜. Ever. Get started with Chime—Signing up takes 2 minutes!
Future of Bank Overdraft Fees
Unlike baggage fees – it looks like banks are eliminating their overdraft fees slowly but steadily. Even though banks have a huge dependence on these fees – they are taking steps in the right direction. Five of the 7 largest US banks have recently taken steps to reduce or minimize bank overdraft fees. Why? COMPETITION.
Yes, there is finally some competition in the banking industry. And oversight hasn’t hurt either. Let me explain.
The traditional banking system has been in place for many years, but in recent years, online banks have become a viable option for consumers. Online banks offer many of the same services as traditional banks, but they also have some distinct advantages. Varo and Chime, credit unions like Alliant have been changing the way people bank.
One of the biggest advantages of online banks is that they often have no overdraft fees. This can save consumers a significant amount of money, as overdraft fees can add up quickly.
Additionally, online banks typically have lower fees in general than traditional banks. This is because they don’t have the same overhead costs as traditional banks. They also tend to offer higher interest rates on savings accounts and lower interest rates on loans. This can be a great benefit for consumers who are looking to save money.
- Bank overdraft fees have brought in over $15 billion a year for banks
- According to CFFB three quarters of these fees are paid by people who pay a bank overdraft fee 10 times or more per year, at an average cost of $380 a year.
- Due to competition, banks are finally lowering, and even eliminating these overdraft fees
Towards the end of the article I will go into detail the best banks to use that HAVE NO OVERDRAFT FEES.
How Does Your Bank Handle Overdraft Fees?
It’s important to know how your bank handles overdrafts, so you can avoid these fees. Some banks may allow you to link your account to a savings account or line of credit, so if you overdraw your account, the money will be transferred from the other account to cover the shortfall.
Other banks may require you to pay back the overdraft plus fees as soon as possible. No matter what your bank’s policy is, it’s always a good idea to keep track of your account balance so you can avoid overdrawing your account.
Here is a great bank fee overdraft chart of the top 20 banks in America
- Wells Fargo imposes a fee of $35 per item for overdraft services, up to 3 a day. Wells Fargo doesn’t charge a fee on overdraft items of less than $5 (or declined transactions).
- Citibank plans to eliminate overdraft fees, insufficient fund fees and overdraft protection fees.
- Bank of America eliminated insufficient fund fees in February 2022. Bank of America overdraft fees were also reduced from $35 to $10, and they alo dropped its $12 balance transfer fee for overdraft protection
- Chase is still charging an overdraft fee of $34 up to three times a day, on transactions over $50. They will no longer charge a fee though when a transaction is declined due to insufficient funds.
Throughout this article I will reference Bank of America and their bank overdraft fees – they are perhaps one of the most popular banks, and the one I get the most questions about.
Best Banks With No Overdraft Fees – What bank does not have overdraft fees?
When it comes to choosing a bank, there are many factors to consider. But if you’re looking for a bank with no overdraft fees and valuable perks, these are the best options.
Best For: Up to $200 in purchase overdrafts, free of charge
Chime is a cutting-edge bank with zero fees whatsoever – no monthly fees, no foreign transaction fees, and no bank overdraft fees. Plus, you’ll receive your paycheck up to two days early with direct deposit. And if you need to access cash, Chime has you covered with over 38,000 fee-free ATMs nationwide.
- Chime Direct Deposit – All of Your Questions Answered
- Does Chime Work With Zelle?
- Cash App And Chime – Does Chime Work With Cash App?
Best For: Someone looking for an alternative to Chime
Varo prevents overdraft fees, offers early access to paychecks, and eliminates foreign transaction fees. Varo’s “Balance Shield” feature automatically transfers funds from savings to cover any shortfalls, ensuring that account holders never have to worry about overdrawing.
Best For: Access to a ton of ATM machines in their network
Alliant Credit Union is an excellent option for those who want to avoid overdraft fees. Alliant has no monthly fees, no minimum balance requirements, and no foreign transaction fees. Plus, you can get your paycheck up to two days early with direct deposit. And if you need to access cash, Alliant has over 80,000 fee-free ATMs nationwide.
- Ally Bank.
Best For: Someone looking to invest and bank together
Ally Bank is another excellent option if you are looking to avoid overdraft fees. Ally Bank offers free checking and savings accounts with no minimum balance requirements. Plus, you also get free online bill pay and mobile check deposit.
- Capital One 360.
Best For: Access to local, Brick-and-mortar bank branches
Capital One 360 also offers free checking and savings accounts with no minimum balance requirements. And, like Ally Bank, you’ll get free online bill pay and mobile check deposit. Capital One 360 also has a great mobile app that lets you manage your account on the go.
- Charles Schwab Bank.
Best For: Link your checking account directly to your brokerage account
Charles Schwab Bank is a great choice for anyone who wants to avoid overdraft fees and earn a healthy interest rate on their checking account. The bank offers a high-yield checking account that pays a very competitive interest rate. Plus, you’ll get free online bill pay and mobile check deposit.
- Discover Bank.
Best For: Full-service, online banking with top credit card offers
If you’re looking to avoid costly overdraft fees, Discover Bank is a great option. The company provides free checking and savings accounts, with no minimum balance required. In addition, free online bill pay and mobile check deposit are both available. Plus, if you hold a Discover card, you can get cash back at over 1 million ATMs worldwide.
- Axos Bank
Best For: Earn either 1% cash back on purchases or 1.25% interest on your balance
Best For: Earning up to 5% cash back on socially conscious spending
Some of the best traditional, bigger name banks with reduced or no overdraft fees and valuable perks include: Ally, Capital One, Chase, Citi and HSBC. Each of these banks has different benefits that make them a better choice for different people.
- For example, Ally is a great choice for people who want a no-frills bank with helpful customer service.
- Chase is great for people who want to access their funds quickly and easily.
- Citi offers great rates on loans and other financial products
- while HSBC is the go-to bank for those who want to protect their money from high fees.
FAQs – Banks Overdraft Fees
Banks overdraft fees can be costly, but there are ways to avoid them. One way to avoid them is to use an online bank account like Chime. Chime, and others, have no overdraft fees, so you can avoid costly fees by using their account.No minimum, monthly, or overdraft fees˜. Ever. Get started with Chime—Signing up takes 2 minutes!
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.