Home > Personal Finance > 6 Banks With No Overdraft Fees

Comments 2 Comments

Spending money you don’t have gets expensive fast. Whether it’s racking up balances (and interest) on credit cards, missing card payments because you can’t afford them or overdrafting your checking account, even one-time slip-ups can seriously strain your finances.

It’s true that spending too much on your credit cards can hurt your credit, but relying solely on debit cards comes with its own risks. Many people say they prefer debit cards because it helps them control their spending — at the same time, that can leave little room for error in estimating your expenses, potentially causing you to overdraft your account.

There are several overdraft services banks provide. First of all, you have to opt into overdraft protections, as mandated by federal law. By default, consumer accounts are set up so a transaction is declined if the cardholder’s account doesn’t have enough cash to complete the purchase. The transaction is declined at no cost to the consumer.

If you want the ability to complete transactions, even if your account can’t cover it at that moment, you can opt into overdraft services, like connecting a savings account to cover any checking account overdrafts. You can also have the bank cover your transaction for a fee, called an overdraft penalty. Most banks charge between $35 and $38 per overdraft, which is the most expensive service banks offer, according to an analysis by The Pew Charitable Trusts of basic checking accounts at the 50 largest banks in the U.S.

If you allow overdrafts, you’re most likely going to have to pay some sort of fee, but there are six large banks that charge no overdraft penalty fees:

  • Ally
  • Charles Schwab
  • Citibank
  • First Republic
  • HSBC
  • USAA

Additionally, there are three banks that offer accounts that prohibit any kind of overdrafting, protecting consumers from fees as a result. Bank of America, KeyBank and Union Bank offer such accounts.

Overdrafts and associated fees can be a big deal for consumers, particularly those who live paycheck to paycheck. Nearly a third of households without a bank account said a reason they remain unbanked is because of unpredictable, expensive fees on checking accounts, according to a 2013 report from the Federal Deposit Insurance Corp.

Losing money to fees can make it difficult to pay necessary bills and make loan payments, which can end up damaging a person’s credit standing. (You can see how missed payments are impacting your credit scores for free on Credit.com.) Make sure you’re familiar with your bank’s overdraft policies, know what you’re signed up for and keep close tabs on your transactions to make sure you’re not overspending — or that someone else is, without your permission. Whatever your preferred form of payment, understanding your account terms and regularly reviewing your account activity will help you avoid unexpected penalties.

More Money-Saving Reads:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Emanuel Constantin Pascariu

    Hi. I want to know about a bank overdraft. … i am Lloyds customer but they don’t want to gove me any overdraft!!!!!! And i need to change bank….

    • http://www.Credit.com/ Gerri Detweiler

      It appears you are writing from the U.K.. Is that correct? We focus on US consumer issues so we’re not sure what the rules are there…

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team