If you’ve ever spent more money than you had in your checking account and got slammed with overdraft fees, you know how quickly they can drain your wallet. You might not even realize you’ve overdrawn your account and keep racking up additional charges before it hits you.
Tired of worrying about overdraft fees? We’ve combed our database to find seven banks that either don’t charge overdraft fees, provide a simple, no-charge method of overdraft protection, or decline transactions so you don’t overdraw in the first place.
Here are the best banks we can find with no overdraft fees:
Axos Bank Rewards Checking
This rewards checking account from Axos Bank — formerly known as Bank of Internet USA — has no overdraft or non-sufficient funds fees. Beyond that, the account grants up to 1.25% APY so long as you meet the following requirements:
- Monthly direct deposits of $1,000 or more earns 0.42%
- Using your debit card 10 times per month (provided those transactions are at least $3 each) earns an additional 0.42%
- Using the debit card 15 times per month earns yet another 0.42%
The account’s APY, combined with its lack of maintenance fees and required minimum monthly balance, makes it an attractive option for high-frequency users.
nbkc bank Personal Account
Based in the Kansas City metro area, this bank offers customers nationwide online access to its Personal checking account. For a mere $5 opening balance, you get a checking account with complimentary online banking, a box of paper checks, bill pay, e-statements and more — and most importantly for this list, there’s absolutely zero overdraft fees.
While using any of the approximately 32,000 ATMs in the bank’s network is free, you will have to pay whatever ATMs outside of its network charge per use. But nbkc commits to reimbursing $12 of those fees every month, so that should take some of the sting out.
Simple’s Safe-to-Spend checking features
Like Axos Bank, Simple’s checking account doesn’t charge for overdraft fees or returned item fees. There are no minimums, no monthly fees, and you get access to 40,000 fee-free ATMs.
Simple’s an online-only bank built with mobile in mind, meaning that while you can access most of its features from your computer, the bank recommends you conduct your business via its smartphone app.
Overall, Simple offers a different kind of banking experience, as it provides tools to help you manage your money. With its “Safe-to-Spend” program, Simple takes into account any upcoming bills or scheduled transfers you have, and does the math and tell you what you can afford to spend. You can also track your financial goals within its mobile app.
Chime spending account
Another online mobile bank, Chime doesn’t charge customers overdraft fees for a very simple reason — it doesn’t allow people to overdraw their accounts in the first place. Like some of the other banks on this list, Chime will decline a transaction that would plunge a customer’s account into a negative balance.
As with other online-only banks, you sacrifice the convenience of being able to stroll strolling into a local branch for the elimination of fees charged by traditional banks. The lone exception is a $2.50 for over-the-counter cash withdrawals or using an ATM not part of its 38,000 machine network.
Aspiration Spend and Save Account
If you’re willing to take a risk on a non-traditional bank that charges zero fees, then look no further than the Aspiration Spend and Save account. Online-only bank Aspiration markets itself as a financial institution for the globally-conscious client, and as part of their ethos refuses to charge fees for anything — including overdrafts.
You do need to deposit an initial $10 to open the account, but once you’re set up the only fees you pay are the ones you voluntarily give to Aspiration, 10% of which are donated to charity. Even better, the account boasts a 2.00% APY and free access to every ATM in existence.
on Aspiration’s secure website
Ally Bank Interest Checking Account
There is no overdraft fee when you have an Ally Interest Checking account, if you enroll in overdraft protection. You can enroll in overdraft protection by linking an Ally savings or money market account to your checking account, and funds will be moved from the linked account to the checking account in $100 increments.
If you chose not to enroll in overdraft protection, Ally charges a once-a-day overdraft fee of $25. That means if you have more than one overdraft item in a single day, the most you’ll be charged is $25 – you won’t get charged a fee every time an overdraft occurs. Of course, Ally will continue to charge you this $25 fee each day your account balance remains negative, so it’s in your best interest to rectify the overdraft as soon as possible.
On the plus side, there aren’t any maintenance fees, there’s no minimum to open an account, and there are no fees incurred when transferring money to a non-Ally bank account.
Fidelity Cash Management Account
The Fidelity Cash Management Account promises “all the features you need from a traditional checking account, without the bank fees.” Fidelity holds true to this promise with no overdraft fees, and opts to decline transactions that would put you in overdraft by default.
However if you enroll in the account’s free Cash Manager program, you can link a savings or brokerage account to your cash management account. Funds will automatically be transferred (up to $99,999.99 per day) to cover a pending transaction if you don’t have enough in your account, but there’s no option to open a line of credit (an overdraft option we’ll discuss later).
What happens if you incur multiple overdraft fees in a day?
At many banks, overdraft fees aren’t always a simple one-time charge. If you aren’t paying attention, you could keep charging your debit card for multiple transactions before realizing you’ve been spending money you don’t have. Depending on the bank’s policy, each overdraft instance may incur its own fee, and there are varying limits on how many fees a customer can get hit with in a single day. Wells Fargo, for example, charges an overdraft fee of $35, with a cap of three charges per day, meaning a customer could be on the hook for up to $105 in fees in one day.
Avoid paying triple-figure fees by knowing when your checking account is running low or by taking swift action once you realize you’re in overdraft territory. The best way to do this is to sign up for account alerts with your bank. Many financial institutions will alert you via email or text (or both) if your account’s balance falls below a certain amount.
Remember, you may think you’re safe but have failed to take into account automatic payments set up for expenses such as utility bills, Netflix, etc. Make sure you keep more than you think you need in your checking account, if possible.
Why you might want to opt out of overdraft protection
Plenty of banks provide overdraft protection services to help provide support to customers who find themselves in an overdraft situation. These banks usually offer protection in one of the following ways:
- Linking another account to your checking account. Some banks, including Axos and Ally on this list, offer an overdraft protection service where you link a savings or money market account to your checking account. If you make a transaction that would cause an overdraft, money from this backup account would transfer to your checking account to cover the cost.
- Offering an overdraft line of credit. If you make a purchase that exceeds the amount of money in your account, the financial institution will cover the amount you owe and treat that sum as a loan, on which you’ll have to pay interest and (probably) a fee.
Of the two methods, linking your checking account to another account presents less risk. Taking an overdraft line of credit means paying interest, and if you can’t correct the overdraft in a timely matter, you could find yourself owing more than you originally bargained for, thanks to snowballing interest payments.
While overdraft protection allows you to make your purchases and provides a way to cover the difference, it often comes with a price. Banks can charge fees for transferring funds between linked accounts, for example, which you may want to avoid.
By opting out of overdraft protection, most banks will simply decline to process transactions that your account balance can’t cover. That’s great if you’re trying to buy a pair of sneakers and don’t want to get hit with fees, but if you need to make an emergency purchase, you could find yourself in trouble.
The bottom line
Overdraft fees are expensive and annoying. Buying an item that costs $5 and getting hit with a $27 fee is a pointless expense. Incurring bank fees like this means you’re essentially throwing money out of the window. If you’re prone to overdrawing your account, plug that leak by signing up with one of these seven no-overdraft-fee checking accounts.
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