Best Banks for Avoiding Overdraft Fees of March 2023

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, banking reporter, Personal Finance 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?

Personal Finance 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.

Best Banks For Avoiding Overdraft Fees: Frequently Asked Questions

Best Online Banks for Avoiding Overdraft Fees

Ally 

Why it stands out: 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 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 Interest Checking 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.”

What to look out for: Ally may close your checking account if you maintain a negative balance for more than 45 days.

Axos

Why it stands out: 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 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 1.00% APY if you keep at least a daily average of $2,500 in an Axos Managed Portfolios Invest Account monthly.
• Earn 1.00% 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.

What to look out for: 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

Why it stands out: 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. 

What to look out for: 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.

Best Credit Unions for Avoiding Overdraft Fees

Alliant

Why it stands out: 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-Interest Checking Account, regardless of your balance.

What to look out for:  Opening an account with a credit union usually entails specific membership requirements. Alliant lets you join online from anywhere in the US if you donate $5 to Foster Care to Success.

Connexus

Why it stands out: 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.

What to look out for: 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. 

Best Brick-and-mortar Banks for Avoiding Overdraft Fees

Citi

Why it stands out: 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, the Citi Access Account (a checkless bank account) and Citi Basic Banking Checking Account.

What to look out for: Citi groups savings and checking accounts into distinct packages. 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

Why it stands out: 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 Account 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 Account 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.

What to look out for: 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 Account has a $12 monthly services fee. 

Bank Alternatives for Avoiding Overdraft Fees 

Our top picks stood out because they had appealing features. While the accounts listed below weren’t among our picks, you still might consider one of these options.

• Discover Cashback Debit Account
  : Discover currently is not accepting new applications for the Discover Cashback Checking Account, but you can sign up to receive an email notification on when you can apply for a new account. 
• SoFi Checking and Savings: SoFi doesn’t charge overdraft fees, but it will decline your purchase if you overdraw by more than $50. Other online banks may have free overdraft protection plans that let you overdraw more money.
• TIAA Yield Pledge® Checking Account: TIAA Bank has free overdraft protection available, but our top picks for online banks may be easier to open because they have lower minimum opening deposit requirements. 
• Quontic High Interest Checking Account: Quontic doesn’t charge overdraft fees, but it requires at least $100 to open an account. Our top picks for online banks let you open an account with less. 
• NBKC Everything Account: The NBKC Everything Account doesn’t charge overdraft fees. It’s a hybrid checking/savings account so you’ll have to be comfortable with keeping all of your money in one account.
• CIT Bank eChecking Account: CIT Bank doesn’t charge overdraft fees, but its checking account requires a $100 minimum opening deposit. Our favorite online banks may be more suitable if you’re searching for an account with more lenient opening requirements. 
• Chase Secure Banking℠: Chase Secure Banking is the only checking account at Chase that doesn’t charge any overdraft fees. If you would prefer a checking account that doesn’t have a monthly service fee, you’ll still have to be mindful of the bank’s $34 overdraft fee. Our top picks for brick-and-mortar banks have multiple checking account options that do not charge overdraft fees.
• Bank of America Advantage SafeBalance Banking® Account: The Bank of America SafeBalance Banking Account is the only checking account at Bank of America that doesn’t charge any overdraft fees. However, if you would prefer one of Bank of America’s other checking accounts, keep in mind there’s a $10 overdraft fee. Our favorite brick-and-mortar banks have multiple checking account options that do not charge overdraft fees.
• Wells Fargo Clear Access Banking: Wells Fargo Clear Access Banking is the only checking account at Wells Fargo that doesn’t charge any overdraft fees. If you would rather get another Wells Fargo checking account, there’s a $35 overdraft to keep in mind. In all, Wells Fargo wasn’t a top pick because other brick-and-mortar banks have multiple checking accounts that do not charge overdraft fees. 
• U.S. Bank Safe Debit account: The U.S. Bank Safe Debit Account doesn’t charge overdraft fees but has a monthly service fee. Our top picks for brick-and-mortar banks also have more than one checking account that doesn’t charge overdraft fees.
• TD Bank Convenience Checking Account: TD Bank has a $35 overdraft fee. Our top picks for brick-and-mortar banks have options with zero overdraft fees.
• Fifth Third Bank Momentum Checking Account: At Fifth Third Bank you’ll have to be mindful of a $37 overdraft fee. You’ll have to see whether any of the overdraft protection plans might be a suitable option for waiving overdraft fees. 
• Citizens Bank One Deposit Checking Account: Citizens Bank has a $35 overdraft fee. Our top picks for brick-and-mortar banks might be more appealing if you would rather find options that do not charge overdraft fees.
• PNC Bank Virtual Wallet®: PNC Bank has a $36 overdraft fee. You’ll have to see whether any of the overdraft protection plans might be a suitable option for waiving overdraft fees.
• Regions Bank LifeGreen® Checking Account: At Regions Bank, you’ll have to be mindful of a $36 overdraft fee. Our favorite brick-and-mortar banks have more than one checking account with zero overdraft fees. 
• Comerica Access Checking Account: Comerica charges anywhere from $26 to $38 on overdraft fees. Our favorite brick-and-mortar banks have options that do not charge these types of fees.
• Consumers Credit Union Free Rewards Checking Account: Consumers Credit Union has a $30 overdraft fee. Our top picks for credit unions have lower fees.
• Bethpage Federal Credit Union Free Checking Account: Bethpage Credit Union has a $30 overdraft fee. Our top picks for credit unions have lower fees.
• Premier Members Credit Union Earn Big Free Checking Account: Premier Members Credit Union charges a $32 overdraft fee, which is higher than our top credit union picks.
• Affinity Plus Federal Credit Union Better Than Free Checking Account: Affinity Plus Credit Union charges a $15 fee if you have a negative balance beyond $100. Our top credit union picks have lower fees.
• Chime Checking Account: Chime doesn’t charge overdraft fees, but it will decline your purchase if you overdraw by more than $200. Our top picks for online banks may have free overdraft protection plans that let you overdraw more money.
• Dora Financial Everyday Checking Account: Dora is an online banking platform with a free Bank On-certified checking account. While this checking account doesn’t allow you to overdraw from your account, our top picks have overdraft protection programs that might be more appealing. Other online banks may have free overdraft protection plans that let you overdraw more money.
• Spruce Spending Account: The Spruce Spending Account only allows you to overdraw up to $20 per month if you receive at least $200 in direct deposits per month. Other online banks may have free overdraft protection plans that let you overdraw more money.

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:

Capital One has an A- rating because it received a high volume of 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 five customer complaints. Ally has an A rating because it has four unresolved customer complaints on the BBB website.

Capital One and Citi have been involved in recent public controversies. 

In 2020, The Office of the Comptroller of Currency required Capital One to pay $80 million in a settlement that said the bank had inefficient security practices, which comprised personal information of bank credit cardholders. 

Citi was required to pay $400 million in a settlement with the Comptroller of the Currency in 2020. The OCC stated the bank had inefficient banking practices.