Final Verdict

In recent years more and more banks and credit unions have eliminated expensive overdraft fees. While there are plenty of options for overdraft fee-free banks to choose from, the six we shared particularly stand out thanks to their overall low fees and other perks. Some banks on our list, including SoFi, Alliant Credit Union, and Ally Bank, offer interest on the money in your checking account. SoFi, in particular, offers an impressive 1.20% APY, which is part of what puts it at the top of our list. Other companies on our list offer perks that include nationwide ATMs, ATM fee rebates, early direct deposits on your paychecks, and more.

Compare the Best Banks for Overdraft Protection

Bank and Account	Minimum to Open	Monthly Fee	Overdraft Policy
	None	None	No fees; coverage for up to $50 with qualifying direct deposits
	$25	None	Multiple coverages to choose from
	None	None	Multiple coverages to choose from
	None	None	Multiple coverages to choose from
	$25	$5	No fees
	None	None	Multiple coverages to choose from

Guide to Choosing the Best Bank for Overdraft Protection

Factors to Consider When Choosing a Bank With Overdraft Protection

When you’re looking at different banks and their overdraft protection options, here are some things to consider:

• Terms of the overdraft protection: Before opting into any overdraft programs, it’s important to read the terms. Knowing what you’re signing up for can help avoid costly fees and unexpectedly declined transactions.
• Overdraft fee waiver: Some banks offer overdraft protection but then charge large fees for it. When comparing different overdraft programs, look specifically for those that waive overdraft fees.
• Overdraft line of credit: One feature that some banks offer is an overdraft line of credit, where you’ll pay interest on your overdrafted amount. While this isn’t necessarily the same as a fee, it still costs money to use.
• Overdrafting limit: In many cases, banks place a limit on overdrafts. For example, some banks set limits as low as $50, while at least one on our list allows you to overdraft up to $600.
• Ability to opt out: Some banks automatically enroll customers in overdraft protection, while others require that they opt in. Either way, make sure you have the ability to opt out of overdraft protection, especially if there are fees involved.

Types of Overdraft Fees

Overdraft fees have become less common in recent years. However, plenty of banks and credit unions still charge them. There are a couple of different types of fees your bank might charge.

The most basic type of fee, an overdraft fee, is charged when you spend more money than you have in your account. Overdraft fees average around $35. Some banks charge you for each transaction that overdrafts your account, while others charge a daily fee.

Some banks may also charge a fee to use their overdraft protection program. For example, a bank might allow you to go negative in your account a certain amount but then charge you a fee. In some cases, the overdraft protection fee applies even if you have an automatic transfer from a savings account set up to cover the overdraft.

Next, some banks charge what’s called an “extended overdraft fee,” which applies when you don’t promptly bring your account balance to positive.

How to Avoid Overdraft Fees

The simplest way to avoid overdraft fees is to avoid spending more money than you have in your account. Unfortunately, while that sounds simple, it’s often far more complicated. A few ways to ensure you always have enough money in your bank account include:

• Create a budget and track your spending
• Monitor your bank account regularly
• Create an artificial buffer in your checking account
• Set up low balance alerts

In cases where overdrafts are inevitable, there are still ways you can avoid overdraft fees. First, shop around for a bank that allows fee-free overdrafts. This will help you avoid overdraft fees, NSF fees, and late fees on your bills. Next, link your checking account with a savings account at the same bank. In many cases, your bank can transfer money from your savings account to your checking account to prevent your account from going negative at all.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews. To rate checking account overdraft protection, we collected hundreds of data points for a score of accounts, including overdraft policies, APYs, fees, and account requirements, to ensure that our reviews help users make informed decisions about their banking needs.