- Best Banks for Avoiding Overdraft Fees
- Ally Spending Account
- Axos Bank Rewards Checking
- Capital One 360 Checking
- Discover Cashback Debit Account
- Alliant High-Interest Checking Account
- Connexus Xtraordinary Checking Account
- Citi Access Checking
- Truist One Checking Account
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If you make a purchase or pay a bill with money that's not in your checking account, you'll overdraft. Many financial institutions charge fees when you overdraft your account, so you could end up owing even more money that you don't have the funds to pay.
If you prioritize finding a bank account that has minimal overdraft fees, you have plenty of options. Here are our top picks on the best banks for overdraft fees. Our top picks have eliminated overdraft fees, or they have free overdraft protection that lets you transfer funds from a linked savings account.
Best Banks for Avoiding Overdraft Fees
- Ally Spending Account
- Axos Bank Rewards Checking
- Capital One 360 Checking
- Discover® Cashback Debit Account
- Alliant High-Rate Digital Checking
- Connexus Xtraordinary Checking Account
- Citi Access Checking
- Truist One Checking
All of our top picks, except Connexus Credit Union, have eliminated overdraft fees. All of the financial institutions on our list are protected by FDIC or NCUA insurance. Your money is safe at a federally insured financial institution. When a financial institution is federally insured, up to $250,000 per depositor is secure in a bank account.
In January 2024, the Consumer Financial Protection Bureau proposed a rule to limit overdraft fees and protect consumers. The proposal mentions setting a benchmark fee, which could be as low as $3, $6, $7, or $14. If adopted, the rule could take effect in October 2025.
Compare the Top Banks for Avoiding Overdraft Fees
The best banks for avoiding overdrafts give you multiple ways to overdraft your account without incurring fees. These include allowing you to go into the negatives without fees and letting you set up overdraft protection using another bank account or a credit card. Keep in mind that the latter form of overdraft protection can get in the way of your budgeting plans, so consider using a budgeting app in conjunction with this form of overdraft protection if you go for it.
Here are the best banks for avoiding overdrafts as picked by Business Insider editors in 2024.
Ally Spending Account
Best online bank for avoiding overdraft fees Ally Spending Account Start banking Ally Bank, Member FDIC
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Feesno monthly service fee
Annual Percentage Yield (APY)0.10% to 0.25%
Minimum Opening Deposit$0
BonusN/A
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Spending buckets to manage expenses
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Competitive APY
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No initial deposit
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No minimum account balance
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly service charge
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Connect your account with Zelle
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Easy-to-use mobile app
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Early direct deposit
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Reimburses up to $10/month in out-of-network ATM fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Online bill pay
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. 24/7 customer service
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No overdraft fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Overdraft protection
- con icon Two crossed lines that form an 'X'. No physical branch locations
- con icon Two crossed lines that form an 'X'. No way to deposit cash
- You can deposit checks right from your smartphone
- Manage expenses by creating spending buckets
- Ally reimburse's up to $10 per statement cycle for fees charged at other ATMs nationwide
- Transfer money with your voice through Ally Skill™ for Amazon Alexa
- Interest compounded daily, paid monthly
- FDIC insured
Ally is a strong choice if you are comfortable with an online-only banking experience. In 2021, the online bank eliminated overdraft fees on all accounts. Ally also has two free overdraft protection options: an overdraft transfer service and CoverDraft. You can use one service or both.
With the overdraft protection transfer service, you'll link your checking account to your savings account. If you overdraw from your account, Ally will transfer increments of $100 from your savings account to cover the transaction.
Meanwhile, CoverDraft is a service that provides up to $250 in temporary overdraft coverage when you have debit card purchases, automatic payments, checks, or ACH transfers from other banks that result in a negative balance on your account.
To be eligible for CoverDraft, you'll need to deposit at least $100 in your account and maintain your balance for 30 days. Once you're eligible, you'll qualify for $100 in temporary overdraft coverage. If you'd like to receive up to $250 in temporary overdraft coverage, you'll have to receive a qualifying direct deposit of at least $250 for two months in a row.
The Ally Spending Account also might also be a good option if you'd like to have tools to help manage your money. For example, Ally lets you create spending buckets to help you set money aside for particular expenses. You'll be able to label your buckets with names like "groceries" or "rent."
Ally may close your checking account if you maintain a negative balance for more than 45 days.
Axos Bank Rewards Checking
Best online bank for avoiding overdraft fees Axos Bank Rewards Checking Start banking On Axos's website
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksFeesno monthly service fee
Annual Percentage Yield (APY) Info icon The Annual Percentage Yield (APY) is accurate as of 6/20/2024. Rewards Checking accounts are eligible to receive APY reward when criteria is met. The account must be in an open and active status on the last business day of the statement cycle to receive the reward. All daily collected balances up to and including $50,000 will earn interest based on the combined rate rewards. All daily collected balances greater than $50,000 will not earn interest. Qualifying transactions must post and clear the account by the 25th of the month to count towards the monthly qualification cycle. Account transactions may take one or more business days from the transaction date to post to the account. At the time of your statement cycle date, we will determine the combined products and services used since the previous cycle date to determine the aggregate interest rate to apply. We will use the daily balance method to calculate the interest. We may change these rewards at the Bank's discretion any time without notice. Fees may reduce earnings.up to 3.30%
Minimum Opening Deposit$0
Bonus Info icon Earn up to $500 welcome bonus when you use the promo code RC500 to apply for a Rewards Checking account and complete qualifying activities by 8/31/24.up to $500
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. High APY
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Unlimited out-of-network ATM reimbursements
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly maintenance fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No overdraft fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No non-sufficient funds fees
- con icon Two crossed lines that form an 'X'. No APY if you can't meet qualifications
- con icon Two crossed lines that form an 'X'. Few mobile app reviews
Axos Bank has strong high-yield savings, checking, and money market accounts if you'd like to avoid monthly service fees. But, you can find higher interest rates at some of the best online banks.
Axos Bank Rewards Checking Product Details- Cash in on up to a $500 bonus† and up to 3.30% APY* with a new Rewards Checking account. Just use promo code RC500 before August 31.
- Build your own APY with up to 3.30% APY*
- Zero monthly maintenance fees
- Zero overdraft or NSF fees
- Zero minimum monthly balance reqs
- No initial deposit requirement
- Unlimited domestic ATM fee reimbursements
- Online debit card management
- Simple, 3-step process for direct deposit
Axos is a great choice if you're searching for a high-yield checking account that doesn't charge overdraft fees or non-sufficient funds fees. Axos also offers free overdraft protection that links your checking account to a savings account.
You'll earn interest on Axos Bank Rewards Checking balances up to $50,000 if you do the following:
- Earn 0.40% APY (Annual Percentage Yield) when you receive at least $1,500 in direct deposits in a month. You have to meet this requirement to be able to earn any additional interest.
- Earn 0.30% APY when you make 10 debit card transactions in a month (minimum $3 per transaction) or you need to sign up for Account Aggregation/Personal Finance Manager.
- Earn 0.99% APY if you keep at least a daily average of $2,500 in an Axos Managed Portfolios Invest Account monthly.
- Earn 0.99% APY if you keep at least a daily average of $2,500 in an Axos Self-Directed Trading Invest Account monthly.
- Earn 0.60% APY if you make a monthly Axos consumer loan payment with your Reward Checking account
If you accomplish all goals in a month, you earn the maximum available APY.
Account balances over $50,000 won't earn interest. If you would like to maintain a high account balance, you may prefer another high-yield checking account.
Capital One 360 Checking
Best online bank for avoiding overdraft fees Capital One 360 Checking
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksFeesno monthly service fee
Annual Percentage Yield (APY)See website for details
Minimum Opening Deposit$0
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Earn interest on all account balances
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No opening deposit or minimum account balance
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly service fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No foreign transaction fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Range of overdraft protection options
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Processes direct deposits up to 2 days early
- con icon Two crossed lines that form an 'X'. Doesn't reimburse out-of-network ATM fees
- con icon Two crossed lines that form an 'X'. Limited access to customer service by phone
Capital One is a strong bank overall. You'll earn competitive interest rates on online savings accounts and CDs.
Capital One 360 Checking Product Details- Over 70,000 free ATMs nationwide
- Branches in NY, LA, TX, MD, VA, NJ, and Washington, DC
- Interest compounded daily, paid monthly
- FDIC insured
Capital One 360 stands out because it has one of the strongest free checking accounts out there. Capital One 360 Checking has no monthly service fees and no overdraft fees. At Capital One 360, you also have two solid overdraft services: free savings transfers and no-fee overdrafts.
With free savings transfers, you'll link your checking account to a savings account. If you overdraw from your checking account, Capital One will make one transfer to cover your overdraft.
No-fee overdraft is a service where Capital One approves check payments, bill payments, or recurring debit payments even if it results in a negative balance for your account. To qualify, you'll need to receive at least $250 in direct deposits during two of the three previous months.
If you do not select one of the overdraft services mentioned, Capital One 360 automatically declines transactions that would make your account have a negative balance.
Discover Cashback Debit Account
BEST ONLINE BANK FOR AVOIDING OVERDRAFT FEES Discover® Cashback Debit Account Start banking Discover Bank, Member FDIC
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. Perks Info icon Cash back earned on up to $3,000 a month in purchases. Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in the no-fee network.Feesno monthly service fee
Annual Percentage Yield (APY)None
Minimum Opening Deposit$0
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Earn up to 1% cash back on up to $3,000 in purchases per month (See website for details)
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly service fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Over 60,000 in-network ATMs
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Get paid early with direct deposit through Early Pay
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Enroll in free overdraft protection
- con icon Two crossed lines that form an 'X'. Debit card can only be used in the US, Canada, Mexico, and the Caribbean
- con icon Two crossed lines that form an 'X'. Only 1 branch location
- Earn 1% cash back on up on up to $3,000 per month in eligible debit card purchases (See website for details)
- 100% US-based customer service available 24/7
- No opening deposit or minimum account balance
- No monthly maintenance fees
- Over 60,000 in-network ATMs
- FDIC insured
You might like Discover if you'd like to get rewards checking account that doesn't charge overdraft fees or non-sufficient funds fees. The Discover® Cashback Debit Account lets you earn 1% cash back on up to $3,000 of purchases per month (see website for details).
The online bank also offers a free overdraft protection program that links your checking account to a savings account. Discover's Overdraft Protection program covers online bill payments, ACH transfers initiated at another bank, and checks.
If you don't sign up for overdraft protection, any transactions that would create a negative balance in your account will be denied.
Alliant High-Interest Checking Account
best credit union for avoiding overdraft fees Alliant High-Rate Digital Checking
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksFeesno monthly service fee
Annual Percentage Yield (APY)0.25%
Minimum Opening Deposit$25
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Earn interest
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No minimum opening deposit
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly service fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. $20/month in out-of-network ATM fee refunds
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No overdraft fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No incoming wire transfer fee
- con icon Two crossed lines that form an 'X'. Compounds interest monthly, not daily
- con icon Two crossed lines that form an 'X'. $25 outgoing wire transfer fee
Alliant is one of the best credit unions out there, especially if you want to earn high interest rates on savings, checking, and certificates.
Alliant High-Rate Digital Checking Product Details- Several ways to become a member; the easiest is to join Foster Care to Success (Alliant will cover your $5 membership fee)
- 80,000+ free ATMs
- Alliant does not charge overdraft fees; you can overdraw, but you will not pay a fee. You may also link checking to a savings account and select for funds to automatically transfer to cover overdrawn amount.
- Interest compounded monthly
- Federally insured by the NCUA
If you prefer an online credit union over a bank, Alliant is an excellent option. Alliant ranks as one of our best credit unions.
The online credit union eliminated overdraft fees on checking accounts in 2021. Alliant also has free overdraft protection program that lets you link your checking account to a savings account to cover overdrafts.
You'll also notably earn 0.25% APY on the Alliant High-Rate Digital Checking, regardless of your balance.
Opening an account with a credit union usually entails specific membership requirements. Alliant is a credit union anyone can join as long as you're in the US and you donate $5 to Foster Care to Success.
Connexus Xtraordinary Checking Account
BEST CREDIT UNION FOR AVOIDING OVERDRAFT FEES Connexus Xtraordinary Checking Account Start banking Connexus Credit Union, NCUA Insured.
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Feesno monthly service fee
Annual Percentage Yield (APY)0% to 1.75%
Minimum Opening Deposit$0
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Ability to earn a high APY
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No minimum opening deposit
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No monthly service fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No out-of-network ATM fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Refunds up to $25/month in out-of-network ATM fees charged by providers
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Multiple overdraft protection options
- con icon Two crossed lines that form an 'X'. Interest compounds monthly, not daily
- con icon Two crossed lines that form an 'X'. $4 overdraft fee
- Become a Connexus member by donating $5 to the Connexus Association
- 54,000+ free ATMs
- Subscribe to e-statements to earn APY. You also must either make 15 debit card transactions per month OR spend $400 per month with your debit card
- Earn 1.75% APY on balances up to $25,000; earn 0.25% APY on balances over $25,000
- Federally insured by the NCUA
Connexus Credit Union is also featured in our best credit unions guide. Connexus Credit Union has a $4 overdraft fee, which is less than what most financial institutions generally charge for overdrafts. The online credit union also has a free overdraft protection program that lets you transfer money from your savings account to restore a negative checking account balance.
You might like the Connexus Xtraordinary Checking Account if you use your debit card frequently and/or spend at least $400 per month with your debit card. That way, you can earn a solid interest rate.
Credit unions require membership to open bank accounts. To become a member of Connexus, make a one-time $5 donation to the Connexus Association; be an employee, retiree, member, student, student graduate, or relative of a member of certain organizations; live in Minnesota, Ohio, or Wisconsin; or be a relative, spouse, or housemate of a Connexus member.
Citi Access Checking
best brick-and-mortar bank for avoiding overdraft fees Citi Access Checking Start banking Citi, FDIC Insured
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksFees$5 monthly service fee
Annual Percentage Yield (APY)None
Minimum Opening Deposit$0
Bonus Info icon Earn $300 cash bonus by opening an eligible checking account and deposit at least two enhanced direct deposits totaling $1,500 or more within 90 days of account opening (offer ends 10/8/24)$300
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No opening deposit
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No overdraft fees
- con icon Two crossed lines that form an 'X'. No paper checks
- con icon Two crossed lines that form an 'X'. $2.50 fee for using out-of-network ATMs
- con icon Two crossed lines that form an 'X'. BBB gives Citi an F in trustworthiness
- Earn $300 cash bonus by opening an eligible checking account and deposit at least two enhanced direct deposits totaling $1,500 or more within 90 days of account opening (offer ends 10/8/24)
- The most basic Citi checking account
- Access to over 650 branches in the US
- No minimum opening deposit
- FDIC insured
Citi is a solid choice if you want to open a checking account at a national bank. Citi is a national bank with branches in California, Connecticut, Florida, Illinois, Maryland, Nevada, New Jersey, New York, South Dakota, Virginia, Washington, DC, and Puerto Rico. You can also open online accounts if you do not live in a state that has a branch.
In 2022, Citi eliminated overdraft fees, returned item fees, and overdraft protection fees on bank accounts. It's also fairly easy to waive the monthly fees for its lowest-tier checking accounts like the Citi Access Checking (a checkless bank account) ($5 monthly service fee).
You'll have to pay attention to monthly service fees and how to waive them because it varies depending on which accounts you get.
Truist One Checking Account
Best brick-and-mortar bank for avoiding overdraft fees Truist One Checking Start banking Truist Bank, Member FDIC
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. Perks Info icon Earn $400 for opening a new Truist One Checking account online using code TRUIST400AFL24 and receive at least one qualifying direct deposit of $500 or more and complete at least 15 qualifying debit card purchases within 90 days of account opening (offer expires October 30, 2024)Fees$12 monthly services fee
Annual Percentage Yield (APY)None
Minimum Opening Deposit$50
Bonus$400
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. No overdraft fees
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Easy to waive $12 monthly fee
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Earn additional awards on eligible Truist credit cards
- con icon Two crossed lines that form an 'X'. $50 minimum opening deposit
- con icon Two crossed lines that form an 'X'. $12 monthly service fee if not waived
- con icon Two crossed lines that form an 'X'. $3 paper statement fee
- con icon Two crossed lines that form an 'X'. $3 out-of-network ATM fee
- Earn $400 for opening a new Truist One Checking account online using code TRUIST400AFL24 and receive at least one qualifying direct deposit of $500 or more and complete at least 15 qualifying debit card purchases within 90 days of account opening (offer expires October 30, 2024)
- Over 2,000 branches and 3,000 ATMs in the Southeast
- To waive the $12 monthly service fee, do one of the following each month: Make $500 or more in direct deposits per statement cycle, maintain a combined total balance of $500 in all eligible Truist accounts before each statement cycle end date, have a personal Truist credit card or mortgage or consumer loan (excluding LightStream), link to a Small Business Checking Account, or be a student under age 25
- To waive the $3 paper statement fee, sign up for paperless online statements
- Account has a tiered system, and each tier comes with more benefits; reach the next tier when your average monthly balance hits $10k, $25k, $50k, and $100k
- FDIC insured
Truist Bank could be another suitable option if you favor brick-and-mortar banks instead of online-only financial institutions. Truist Banks is primarily on the East Coast, with branches in Alabama, Arkansas, Georgia, Florida, Indiana, Kentucky, New Jersey, Maryland, Mississippi, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Washington, DC.
In 2022, Truist launched two new checking accounts to help with avoiding overdraft fees. It also eliminated fees for returned items and overdraft protection transfers.
The Truist Confidence Account is a checkless checking account that doesn't charge overdraft fees. You can utilize overdraft protection to cover overdrafts if you have a Truist Confidence Savings Account; otherwise, any transaction that exceeds your account balance may be denied or returned.
The Truist One Checking also doesn't charge overdraft fees and has more overdraft options (although, it also has a higher monthly maintenance fee). You can link the Truist One Checking to another Truist bank account or potentially use a service called $100 Negative Balance Buffer.
With a $100 Negative Balance Buffer, you can overdraw up to $100 from your account. To qualify for the service, you'll need to have an account open for at least 35 days, maintain a positive account balance, and receive at least one direct deposit of $100 for two months in a row. Also, bear in mind that you'll need to continue to receive monthly direct deposits of $100 or more to remain qualified for the service.
With Truist checking accounts, you'll want to be mindful of monthly service fees if you don't meet certain requirements each month. Truist Confidence Account has a $5 monthly service fee, and the Truist One Checking has a $12 monthly services fee.
Bank Trustworthiness and BBB Ratings
The Better Business Bureau assigns companies grades, ranging from F to A+. Strong BBB scores indicate that companies respond effectively to customer complaints, advertise honestly, and are transparent about business practices. A strong BBB grade doesn't guarantee you'll have a smooth relationship with a company, though.
Here are the BBB grades for our top picks:
| Institution | BBB |
| Alliant Credit Union | A+ |
| Ally | A |
| Axos | A+ |
| Capital One | A+ |
| Discover | A+ |
| Citi | F |
| Consumers Credit Union | A+ |
| Truist | A+ |
Ally has an A rating because it has some unresolved customer complaints on the BBB website.
Citi has an F rating because it has a high volume of customer complaints on the BBB website, and it has failed to respond to many customer complaints.
Capital One, Discover, and Citi have been involved in recent public controversies.
Capital One used to have an account called 360 Savings. In 2019, Capital One launched the new 360 Performance Savings Account, which paid a higher interest rate. Many customers thought their old savings accounts would transition into this new one, but they actually had to open a new 360 Performance Savings Account to earn the higher rate. In the lawsuit, the plaintiffs' lawyers allege that Capital One didn't inform 360 Savings customers that these were two distinct accounts, or that 360 Performance Savings paid a higher rate. However, Capital One wants this case dismissed because it claims people had every opportunity to learn these facts on their own. This case is still ongoing.
In 2024, Discover settled a class action lawsuit for almost $1 million. The lawsuit claimed that Discover denied Deferred Action for Childhood Arrivals, or DACA, recipients loans because of their immigration status. In the settlement, Discover agreed to rewrite its lending rules to make DACA recipients equally eligible for loans as comparable U.S. citizens.
In 2023, Citi was required to pay $25.9 million dollars by the Consumer Financial Protection Bureau. The Bureau says that Citi intentionally discriminated against Armenian American credit card applicants from 2015 to 2021. Of that $25.9 million, $1.4 million of that payment will go to affected applicants.
In addition, Citi is currently being sued for sexual harassment by a managing director at the company, Ardith Lindsey. Citi hasn't admitted to any wrongdoing, and this case is ongoing.
What to Look for in Overdraft Policies
Low Fees and Clear Terms
First and foremost, you should try to find banks that don't charge overdraft fees at all, or banks with low overdraft fees. We've listed several banks above that don't charge overdraft fees, but still allow you to overdraft your account up to a certain amount.
If a bank does have overdraft fees, make sure you understand when you'll be charged those fees, and how much you'll be charged for them. Look out for fine print that might indicate you'll have to pay a higher fee than you're prepared for.
Overdraft Protection Services
Many banks allow you to set up overdraft protection services by linking another account, credit card, or line of credit to your checking account. If you end up overdrafting your account, the bank will either transfer money from the savings account or put the charge on the credit card or line of credit instead.
There might be a transfer fee associated with this service, but it will almost definitely be less expensive than the overdraft fee you would have otherwise been charged.
If you choose to set up overdraft protection services, you'll still want to keep an eye on your spending to make sure you're not cutting into your savings or putting money on a credit card that you can't pay off. Consider using personal finance software to help stick to your budget.
Options for Fee Waivers and Alerts
Some banks let you refund your overdraft fees under certain circumstances, such as if you restore a positive account balance within a day or if you haven't overdrawn your checking account before. In addition, many banks let you set up low balance alerts to let you know when you're about to run out of money in your account.
Check with the bank you're interested in to see if they offer any of these services.
Overdraft Protection Services
Linking Accounts for Automatic Transfers
One of the most common ways to set up overdraft protection services is to link a savings account to your checking account. If you overdraft your account, the money will come out of your savings account instead.
You might prefer this over other kinds of overdraft protection, because you won't end up accidentally accruing a debt you can't repay. However, you'll want to watch out for transfer fees. Also, keep in mind that you could end up accidentally cutting into your savings with this method.
Overdraft Lines of Credit
Setting up an overdraft line of credit will let you borrow money from a line of credit to pay off any excess charges you make. This can be helpful in avoiding overdraft fees, but keep in mind that setting this up could result in you having high-interest-rate debt that you don't have the money to pay off.
Overdraft Forgiveness Programs
Several banks, such as Wells Fargo, will refund any overdraft fees under specific circumstances. Some banks refund overdraft fees if the excess charge is under a certain threshold, some banks refund fees if you put money back into your account before a certain amount of time passes, and some banks refund the first few overdraft fees you accrue.
While even the best overdraft forgiveness programs aren't as good as not charging overdraft fees at all, it can still be helpful if you do end up accidentally overdrafting your account. Check with your bank to see how to get overdraft fees refunded.
How to Avoid Overdraft Fees
Monitoring Account Balances
Overdraft protection and management are both important parts of avoiding overdraft fees. The best way to avoid overdraft charges is to keep an eye on your account balance and avoid making purchases if you don't have enough money in your account. This includes making sure you have enough money to make automatic payments, such as rent, insurance, or utilities payments.
Setting Up Account Alerts
Many banks offer financial tools to prevent overdrafts, such as account alerts. Account alerts will let you know if your account balance goes under a certain amount of money. Check with your bank to see if it offers this feature.
Opting Into the Right Overdraft Protection Services
If you opt into overdraft protection services like the ones listed above, you can avoid paying overdraft fees. Just make sure you're not signing up for services that will end up costing you more money in the long run, such as with overdraft protection through lines of credit.
FAQs
What is an overdraft fee, and how much can it cost? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Overdraft fees occur when you try to take more money out of your account than you have. The exact fee will depend on what bank you use, but banks can charge between $0 to $38 per overdraft.
How do banks' overdraft protection services work? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Usually, you'll connect your checking account to another account, credit card, or line of credit that will be automatically charged if you overdraft your account. There can be a transfer fee involved, but it will generally be less than an overdraft fee would be.
Can I opt out of overdraft fees? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Yes, most banks allow you to opt out of overdraft fees. In that case, if you try to make a purchase that you don't have the funds for, the transaction will just be denied.
What is the best bank for overdraft? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.There are several banks that have strong overdraft policies. Ally, Capital One, and Citi are a few. Before going with a specific bank, see what specific overdraft features they offer, as there are several ways that banks can implement overdraft forgiveness.
Is there any way to avoid overdraft fees? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.There are several ways to avoid overdraft fees. The simplest is to go with a bank that does not charge overdraft fees. If you don't want to switch banks, most banks let you turn off overdraft entirely. If you make a transaction that would take your account balance to below $0, that transaction won't go through, but you won't be charged any fees.
What are some banks that offer overdraft forgiveness? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.You can get your overdraft fees refunded at several banks, such as Chase, Wells Fargo, and Fifth Third Bank, under certain circumstances, such as when you put money back into the overdrafted account within a certain amount of time.
How can I best manage my account to avoid overdrafts? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Banking with an institution that provides overdraft forgiveness and protection can help you avoid overdrafts. Otherwise, you'll want to monitor your spending, set up low balance alerts, and create a budget for yourself to avoid overspending.
Which bank has the lowest overdraft fee? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.There are several banks that don't charge overdraft fees at all, such as Ally, Capital One, and Discover.
Which bank doesn't charge for overdraft? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.There are several banks that don't charge overdraft fees, such as Ally, Capital One, and Discover.
Why You Should Trust Us: Our Expert Panel for the Best Banks for Avoiding Overdraft Fees
We consulted banking and financial planning experts to inform these picks and provide their advice on how to find the right bank for you.
Here's what they had to say about choosing a bank. (Some text may be lightly edited for clarity.)
How can someone determine whether a banking institution is the right fit for them?
Mykail James, MBA, certified financial education instructor, BoujieBudgets.com:
"The No. 1 thing about a checking account is you should know what provider the debit card is coming from. And a lot of people don't think about that, because there are places that don't accept MasterCard or don't accept an Amex."
Sophia Acevedo, certified educator in personal finance, banking editor, Business Insider:
"Think about which bank accounts you'd like to open and which features you're looking for. Let's say you sometimes overdraw from your bank account. When you're deciding on a bank, you'll want to see if the bank offers a checking account that doesn't charge overdraft fees. You could also see if the bank has an overdraft protection program where you can manageably waive fees by meeting certain requirements."
How can someone decide between a bank and a credit union?
Tania Brown, certified financial planner and vice president of coaching strategy at OfColor:
"For most people, it falls into five categories: location, interest rates, services, technology, and relationships. Next, prioritize what's important and you will have your answer. For instance:
- If multiple regional and national locations are important: Banks typically have more locations than credit unions.
- If the most important thing to you is a high interest rate: Credit unions, on average, offer better interest rates than banks.
- If a lot of services (commercial banking, business banking, investment services, etc.) are valuable to you: Larger banks offers more services than most credit unions.
- If feeling like a person, not a number, matters to you: Credit unions are known for great personalized customer service.
- If you are a tech junkie: Larger banks typically offer more tech bells and whistles for online users than credit unions."
What makes a checking account good or not good?
Roger Ma, certified financial planner with lifelaidout® and author of "Work Your Money, Not Your Life":
"I would look at the ATM branch locations and then minimum balance amounts to not incur a monthly fee… I think there's other stuff that could make life easier, whether it's free checks, online bill pay, are they in the Zelle network?"
Sophia Acevedo, certified educator in personal finance editor, Business Insider:
"I would for a checking account that either doesn't have any monthly services fees or offers multiple ways to waive the fee. I would also look at customer support availability and mobile app ratings."
Methodology: How Did We Choose the Best Banks for Avoiding Overdraft Fees?
Business Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.
For our guide, we researched over two dozen financial institutions and financial service providers to find options that minimized overdraft fees.
Since numerous checking accounts at online banks didn't charge overdraft fees, we narrowed down our picks for this category by looking at minimum opening requirements and overdraft protection programs. For all of our top picks, we also considered the overall banking experience at each bank by using our rating methodology for checking accounts, which assesses criteria like customer support availability, mobile app ratings, and ethics.
Sophia Acevedo Banking Editor Sophia Acevedo is a banking editor at Business Insider. She has spent three years as a personal finance journalist and is an expert across numerous banking topics.ExperienceSophia leads Personal Finance Insider's banking coverage, including reviews, guides, reference articles, and news. She edits and updates articles about banks, checking and savings accounts, CD rates, and budgeting and saving. She is highly knowledgeable about long-term trends in rates and offers at banks across the U.S.Before joining Business Insider, Sophia worked as a journalist at her college newspaper and was a freelance writer. She has spent seven years writing and editing as a journalist.Sophia was nominated for an Axel Springer Award for Change in 2023 for her coverage of ABLE accounts, tax-free savings accounts for people with disabilities. She was also a winner of a 2018 California Journalism Awards Campus Contest for her photography.She loves helping people find the best solutions for their unique needs and hopes that more people will find the tools to solve their financial problems. She’s inspired by stories of everyday people adapting to their financial circumstances and overcoming their fears around money.ExpertiseSophia's expertise includes:- Bank accounts
- Savings and CD rate trends
- Budgeting
- Saving
- How banks operate
Evelyn He Compliance and Operations Associate Evelyn He is a Compliance and Operations Associate on the Personal Finance team to ensure content accuracy and editorial independence so readers get up-to-date and objective financial advice.The compliance team's mission is to provide readers with fact-checked and current stories so they can make informed financial decisions. The team also works to minimize risk for partners by ensuring language is clear, precise, and fully compliant with regulatory and partner marketing guidelines that align with the editorial team. Read more Read less 
Kit Pulliam Personal Finance Insider editorial fellow Kit Pulliam (they/them) is a banking expert who specializes in certificates of deposit, savings accounts, and checking accounts. They’ve been reporting, editing, and fact-checking personal finance stories for more than four years.ExperienceKit has spent their career making complicated concepts more accessible to the average person. As a tutor in math and reading comprehension after college, they melded the certainty of numbers with the flexibility of words, a skill that has served them in the personal finance field since. Before Business Insider, Kit was an editorial specialist for Tax Analysts, diving into the tax code to help readers get the best information about a confusing but necessary subject.They find banking similar to taxes in that way: There are some things everyone needs to know because just about everyone needs to work with a bank — and you don’t want to end up with an account that doesn’t serve your needs.As interest rates change, they enjoy the fast pace of reviewing rates for products like CDs and high-yield savings, which can change daily and have a direct impact on readers’ money.ExpertiseTheir expertise includes:- Certificates of deposit
- Savings accounts
- Checking accounts
- CD rates
- Bank reviews
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