Eliminating Overdraft Fees

Overdrafts are incredibly complex, and a simple mistake could cost you hundreds of dollars. But if you play smart, you can avoid them. 

How it works

Overdraft fees in the US are some of the most complex and costly in the world, with over $30 billion being generated in fees for banks last year alone. If you got stuck paying, you might have spent an average of $225 a year! And all because banks routinely approve transactions when there are insufficient funds in the account (the definition of an overdraft). To avoid this, you must "opt out" of ATM and debit overdrafts, so most purchases made with insufficient funds will be declined. After you opt out, enroll in "overdraft protection" by linking a line of credit or savings. You might still incur fees — overdrafts are where banks always seem to get you — but you'll pay a lot less. The single smartest thing you can do is switch to an online bank. 

5 things to know


Know your minimum deposit requirement and always keep a buffer.

Otherwise you run a high risk of being charged a monthly maintenance fee.


Opt out of debit and ATM overdraft “protection.”

For debit transactions, use a credit card, where there is no fee and you have the grace period to pay it back.


Switch to an online bank.

You can save literally hundreds of dollars in fees by forgoing a brick-and-mortar bank.


Don’t fall victim to marketing.

Your goal should only be a no-fee account with low-cost protection if something goes wrong.


Linking an account for overdraft protection can be a good thing.

The bank automatically places you in overdraft for these kinds of accounts, and will charge astronomical fees if you do not link an account.

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