Of all the fees your bank might charge, overdraft fees pack the biggest punch. Not only are they expensive — about $30, according to the Federal Deposit Insurance Corp. — but you can be hit with multiple overdraft fees in a single day. Banking at a financial institution with no overdraft fees eliminates that risk. We will explore some of the top banks with no overdraft fee below.
10 Best Free Checking Accounts With No Overdraft Fees
If you’re looking for banks that don’t charge overdraft fees, here are some of the best options to consider.
1. Ally Bank
Ally Bank is an online-only bank that eliminated overdraft fees on all its accounts in 2021. It gives spending account holders two ways to deal with overdrafts.
First is the Overdraft Transfer Service. Link your Ally Bank savings or money market account to your spending account and Ally will transfer funds, rounded up to the nearest $100, if you accidentally overdraw your spending account.
The second way is with CoverDraft service, which is a fee-free safety net. CoverDraft covers up to $250 until your next direct deposit, when Ally settles up your account. Most customers qualify for CoverDraft 30 days after depositing at least $100 into their spending account. With qualifying direct deposits, you can increase that to $250. Either way, the overdrawn funds must be repaid within 14 days.
Other Perks
- No monthly fees
- Paycheck available up to two days early if direct-deposited
- Interest-earning checking account pays up to average percentage yield
What To Watch Out For
- Overdraft transfers count toward savings account limit of six convenience withdrawals per statement period
2. Discover® Bank
Discover® Bank’s overdraft protection program automatically transfers funds from a linked Discover checking, savings or money market account if a transaction will drop the balance to below $0. It’s an optional service that covers ACH, check and bill-pay transactions. It does not cover debit card or ATM transactions, in-store cash back or funds transfers you initiate. However, you’ll receive an alert if any of these transactions will overdraw your account. And more importantly, Discover won’t charge any fees if they do.
Other Perks
- No monthly fee or balance requirements
- 1% cash back on up to $3,000 in debit card purchases each month
- Free bank checks
- Free check reorder
What To Watch Out For
- Overdraft transfers count toward savings account limit of six convenience withdrawals per statement period
3. Axos
Axos is an online bank offering several different checking accounts, several of which — Essential Checking, Rewards Checking and First Checking — have no overdraft fee. As a bank with no overdraft fees, it offers a standard overdraft protection program, where you link a savings account and give Axos permission to move funds from it into your checking account to cover items for which you have non-sufficient funds. There is no fee for using overdraft protection for eligible checking accounts.
Other Perks
- Several accounts to choose from
- No monthly maintenance fee
- 24/7 customer support
What To Watch Out For
- Low APYs
4. Fidelity
Fidelity’s Cash Management account is a brokerage account that works similarly to a checking account. Using the account’s Cash Manager, you can self-fund overdraft protection for free using any Fidelity funding account. Eligible funding sources include available cash, available margin and non-core money market funds in your designated Fidelity funding accounts. In the event you conduct a transfer that would put your account into overdraft, Cash Manager automatically moves enough money from one of those funding accounts to cover it.
If applicable, accounts are selected according to a predetermined hierarchy. There’s no interest unless Cash Manager needs to tap into available margin, but replenishing the funding accounts reduces the interest charges.
Other Perks
- APY
- No account fees or minimum balance requirements
- Cash Management balances insured by FDIC through program banks
- Global ATM fee reimbursement
What To Watch Out For
- Must have Fidelity brokerage account to open Cash Management account
5. Betterment
Betterment takes a somewhat different approach to overdrafts. Whereas many banks allow certain transactions to go through even if they’ll result in an overdraft, Betterment alerts the merchant that the account has insufficient funds to cover the purchase and then reverses the transaction. While you have to use a different payment method to complete the transaction, you never have to worry about reducing your balance to less than $0.
Other Perks
- No account fees
- ATM and foreign transaction fees automatically reimbursed
- Paper checks available
- Cash-back rewards from thousands of participating brands
- Joint checking account available
What To Watch Out For
- Checking account doesn’t earn interest and is not linked to interest-bearing Cash Reserve
6. Wealthfront
Wealthfront charges no overdraft fees on its Cash Account, which is a combination checking and savings account. What’s more, an automated savings feature helps account holders avoid overdrafts entirely in most cases by establishing a maximum balance for the linked Cash Account and sweeping any balance above that into savings. That savings can then be used to cover overdrafts.
Other Perks
- APY
- No fees
- Direct-deposited paychecks available up to two days early
- Unlimited withdrawals
- $10 wire transfers
What To Watch Out For
- $2.50 non-network ATM fee
- $5.95 cash deposit fee
7. Alliant Credit Union
Alliant is a credit union with no overdraft fees on its checking account; also, there are no non-sufficient funds fees. Overdraft protection is optional, but if you sign up, Alliant will automatically transfer money from your savings account to avoid accidental overdrafts. This allows Alliant to honor your checking overdrafts as long as you have enough money in your Alliant Savings or Supplemental Savings account. Note, however, that overdraft protection doesn’t cover ATM transactions.
If you have an Alliant line of credit, you can link your line of credit to Overdraft Protection. If the credit union must tap into your line of credit to avoid an overdraft, you’ll be charged a $3 fee.
Courtesy Pay provides an additional means of optional protection. If you meet eligibility criteria, Alliant will cover checks, electronic payments and transfers even if you don’t have enough savings to cover the transaction. Extended Courtesy Pay also pays overdrafts on everyday debit card transactions. The overdrawn balance is due within 30 days.
Other Perks
- No monthly service fee or minimum balance requirements
- 0.25% APY when you make one electronic deposit per month
- 80,000 fee-free ATMs to choose from
- $20 per month in ATM fee rebates
What To Watch Out For
- $25 minimum opening deposit for high-yield checking account opened online or by phone
8. Capital One
Capital One has eliminated overdraft fees on all of its consumer accounts, including 360 Checking. You can choose from three overdraft settings: auto-decline all transactions that cause overdrafts; automatically transfer funds from your savings or money market account; or allow Capital One, at its discretion, to approve transactions that will overdraw your account.
Capital One customers who previously were enrolled in Next Day Grace automatically were converted to the No-Fee Overdraft option.
Other Perks
- No fees or minimum balance requirements
- Can add cash to account at Walgreens and CVS stores via mobile app
- Direct deposited paychecks available up to two days early
What To Watch Out For
- Low APY
9. Citi®
Citi was one of the first major banks to do away with overdraft, returned item and overdraft protection fees on consumer accounts. The changes went into effect in June of 2022, saving account holders plenty of money in unnecessary charges.
As one of the big banks that don’t charge overdraft fees, the rules are surprisingly straightforward. How Citi handles overdrafts depends on which account you have. With Regular Checking, Citi may, at its discretion, allow payments to go through even if they’ll cause a negative balance. Access Checking, on the other hand, declines transactions if you don’t have the funds to cover them. Overdraft protection is still available from a Citi savings or money market account at no charge.
Other Perks
- Monthly service fees waived in first three months and in months account has $250 or more in enhanced direct deposits
- $2.50 non-Citi ATM fee waived with $250 in enhanced direct deposit with Regular Checking
What To Watch Out For
- $5 and $15 monthly service fee for Access Checking and Regular Checking, respectively, if not waived
10. SoFi
SoFi’s high-yield checking account has no overdraft fees, and it provides overdraft coverage for up to $50 on debit card purchases for customers who have monthly direct deposits of $1,000 or more. The account comes with a savings account that earns APY when you set up direct deposit. [13]
Other Perks
- APY
- No minimum balance requirements or monthly fees
- Direct deposited paychecks available up to two days early
- Debit card purchase amounts automatically rounded up into savings account
- Up to 15% back on purchases from qualifying local businesses
- Bonus for setting up direct deposit
What To Watch Out For
- $50 limit on overdraft coverage
How To Avoid Overdrafts
Checking accounts with no overdraft fee can save you money, but the best way to avoid the fees is to avoid overdrawing your account. That’s often easier said than done — anyone can make a mistake with their account or come up short of funds because of an unexpected expense. The American Bankers Association and Consumer Financial Protection Bureau offer suggestions to reduce the risk of this happening to you.
- Direct deposit your paychecks so you have immediate access to the funds.
- Opt out of debt card overdraft and other optional services that allow transactions to go through even if they’ll overdraw your account.
- Make note of the dates major autopay bills like rent, mortgage, utilities and insurance come out of your account so you can ensure that the funds are there.
- Check your transactions frequently, especially if you have subscriptions and other easy-to-forget bills automatically debited from your account. While reviewing the charges, remember that your available balance only reflects processed transactions, although you might also see pending transactions — those the bank is aware of but hasn’t yet processed.
- Sign up for low balance alerts from your mobile banking app.
- Maintain a cushion in your checking account balance. For example, consider your balance to be $0 when it reaches $50 or $100.
- If you don’t have a savings account, see if you can use a credit card for overdraft protection — but first, compare your credit card’s cash-advance fee to the bank’s overdraft fee to make sure it would actually save you money.
- Apply for a personal line of credit that can be used for overdraft protection. Be sure to pay off the balance each month so that interest payments don’t eat up your savings.
Final Take
It’s helpful to work with no overdraft fee banks. While many of the best banks with no overdraft fees are worthwhile contenders for your business, it’s important to note that overdraft fees aren’t the only fees banks charge. Before you open a new account, read the fine print to see whether you’ll incur other costs, such as a monthly maintenance fee, that can cost you more over time if you rarely overdraw your account. If you are unlikely to overdraw your account, it might be more important to consider banks with low overdraft fees.
Overdraft Fee FAQ
- Which bank has the best overdraft limit?
- There are several banks that no longer charge fees for overdrafts, so you don't have to worry about going over your account limit. They include Citi, Ally Bank, Capital One and more.
- Can I get overdraft fees waived?
- Most banks will waive one fee per year as a courtesy if you made an honest mistake. Or you could sign up for overdraft protection to avoid the fees in the first place.
- How can I avoid getting charged for an overdraft?
- To avoid overdrafts, it's important to monitor your account balance. Be sure to note any outgoing checks and how they affect your balance. You can also sign up for notifications through the mobile banking app to warn you when your balance falls below a certain threshold.
Melanie Grafil, Cynthia Bowman and Lydia Kibet contributed to the reporting for this article.
Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of Oct. 9, 2023.
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