Introduction
What is the overdraft fee?
Overdraft fee is a kind of fine that is charged to you by your bank when you purchase something using your account or make a payment using your account and your checking account does not have enough money to cope with that expenditure. The bank charges you an overdraft fee when you can’t cope up with your expenditure and your expenses are more than your deposits.
In addition to overdraft fees, the bank also charges you another kind of fees such as non-sufficient funds fee etc. Your bank charges you a non-sufficient funds fee when any of your transactions are declined by the bank. For example, you make a transaction of $200 from your bank account , but you are only having $150 in your account then the bank will charge you a non sufficient funds fee
Banks having eliminated overdraft fees?
Most of the bands have earned so much money by charging overdraft fees from its customers. This profit is calculated to be near about $11 billion in the year 2021. Sometimes the banks follow unfair practices and charge more fee from the customers that is double or triple the amount of the actual fee that is to be charged. This fee was charged from those customers who do not have sufficient bank balance in their accounts.
Citibank
Generally it is said that the big banks charge you a greater amount of fees as compared to the small banks but the Citibank charges you only a minimal amount of fee that is affordable by all. In the year 2022, the bank stopped charging any kind of overdraft fee from the customers. Along with this, the bank also stopped charging another kind of fee from the customers such as returned item fees and overdraft protection fees.
Also, if you have struggled in the past to monitor your account balance, then this bank helps you to monitor your account easily without facing any kind of problems. Along with this, Citibank provides you two additional features. The first feature is that of safety check. If your city savings account is a linked account then you can opt for automatically transferred funds. The second feature is that of checking plus. It helps in transferring your funds automatically.
Capital one
Capital one bank stopped charging overdraft fees from its customers in January 2022 and followed the no fee overdraft protection policy. But if you do this, then you have to deposit money into your account in order to cover the overdraft.
After you have overdrawn and then after that you decide or choose to use your card your transaction will be declined by the bank if you have not funded your account. You also have an option by which you can make your overdraft transaction decline. In order to cover overdrawn transactions , you can link to a money market savings account or a capital one account.
Discover
In the year 2019, the Discover bank stopped taking any kind of fees on its checking, money market, and savings account. This bank also eliminated its non-sufficient fund fee of around $30. If you are having your account in the Discover bank or money market account in this bank, then you can also enroll in the free overdraft protection programme which is supported by the company.
Chime
Chime is not a bank, but it is a financial technology company. The accounts of this financial technology company are FDIC insured. This financial technology company does not charge any kind of overdraft fee from its customers. Along with this it also does not charge any kind of monthly fees or foreign transaction fees. Also, it does not have any minimum balance requirements. That is, you don’t need to have a minimum balance in your account in order to maintain it.
Chime has a free overdraft protection service which is optional. This service is known as SpotMe. But this free overdraft protection service is only available to those account holders who make a direct deposit of around $200 in their account every month or more than that in their checking account. When you enrolled into this for the first time you can overdraw up to $20 on all your purchases that you do using a debit card and other cash withdrawals.
After this, as time passes by, you become eligible to overdraw more money, that is nearly $200. If you want to overdraw more money, and also, you have not enrolled in any of these services, then chime will simply decline your transaction. A major advantage is that you do not have to pay any kind of fees when your transaction is declined.
Ally bank
Ally bank provides online banking services to the customers that waived overdraft fees at the starting of the pandemic called as COVID-19. After the pandemic was over, the bank decided to eliminate the overdraft fees on all the accounts all over the world. Thus you do not have to pay any kind of overdraft fee for any of your accounts in this bank. Along with this, you can also set up extra protection.
For instance, if your interest checking account is linked to some another account, such as your online savings or your money market account, and if you withdraw money by mistake, that is, you don’t want to withdraw intentionally, but anyhow, you withdraw it, then the bank will transfer money over which is rounded up to the nearest hundred dollars.
But you can only make around six withdrawals per your statement cycle.You can also qualify for cover draft service which provides you up to $250 as a relief for the transaction when you overspend.
Aspiration
Aspiration is a financial firm, which works only in online mode. It is not a bank, but it offers a variety of account choices to its customers. This firm generally focuses on sustainable spending. You cannot open a traditional savings account or checking account in this firm but it allows the customers to open a cash management account which they can use for daily transactions called spend and save.
Chase
This bank has collected a huge amount of money by charging overdraft fees from its customers. But with time, the bank has made certain changes such as it has eliminated various different kinds of fees, such as insufficient funds fee. Also the bank has stopped charging any kind of overdraft fee if your account is overdrawn by $50 or more than that.
Truist
This bank offers different banking offers to its customers. The most common one being two checking accounts without any kind of overdrew fees. If your balance goes negative then, all the transactions that you do using your account will be declined by the bank. This feature is only available to those Truist customers who have deposited $100 or more than that at least for two months.
Bank of the west
In the year 2022, the bank of the west eliminated all the fees that were not required or that were not the sufficient fund fees. But despite this, the bank still charges a fee that is around $35 as the overdraft fee.
Wells Fargo
The Wells Fargo bank did not eliminate all kinds of fees, but it eliminated only a few types of fees that are associated with overdrawing this year. This tells us that the fees are not completely eliminated, but are lowered to some extent. If you are a member of the overdraft protection service of the Wells Fargo bank then you do not have to pay any kind of fees when your account, which is a linked account, covers an overdraft.
Along with this, you also do not have to pay other types of fees, such as returned item fees or non-sufficient funds fees. If there is an unpaid transaction, you get paid either a cheque or the unpaid transaction itself. but if you overdraw your account, then Wells Fargo bank charges you a fee of $35.
There is another program which is known as extra day grace period programme, according to which you get to maintain the balance of your account in good standing and avoid the fee for a 24 hour buffer.
US Bank
US Bank stopped charging any kind of non-sufficient funds fee in January 2022. The amount at which your account can be overdrawn was also increased from $5 to$50 without incurring a fee. But if your account is in a negative balance, that is more than $50 then you will have only one day to deposit those funds, if you do not want to pay an additional $36. When you sign up, you get an additional advantage that the bank informs you via a text message or email telling you that the balance of your account is low and you need to replenish your funds.
Santander Bank
In November, the Santander bank increased the value of its overdraft threshold. The value was increased from $5 to $100. This means if your account balance is overdrawn, less than hundred dollars or equal to hundred dollars, then you do not have to pay any kind of fees. But if you overdraw more than hundred dollars, then you have to pay a fee of $35, which is mandatory for all.
The frequency of you being charged by the bank was also decreased by the bank. That means the number of times you can be charged has decreased. The number was decreased to 3 to 4 times per business day. The overdraft protection transfer fee charged by the bank which was around $12 was also eliminated by the bank.
This means that when you transfer your funds from your overdrawn checking account to your linked deposit amount, at that time, you won’t be charged any kind of fee.
Alliant credit union
A credit union is a very big credit union in Illinois. It is considered as the largest in the country. This credit union also eliminated the overdraft and non-sufficient fund fees like all other banks. This fund fee was removed from all types of accounts such as checking and savings accounts.
The bank has a courtesy pay programme which can be joined by anyone which covers different types of payments such as electronic payments and transfers , payments through checks etc. A big positive point of this program is you do not have to pay any kind of membership fee in order to enroll in this program.
How to avoid overdraft fees?
Opt out
The first way to avoid overdraft fees is talking to the bank account or the credit union that you have your account in. Once you have done this, the transactions that are over your budget or that are causing your balance to fall in negative are automatically declined by the bank. The only thing which you need to make sure is that you are not subject to the non-sufficient funds fee.
Link your savings account
The other method to avoid overdraft fees is linking your account. When you link your different accounts then the amount that is not covered by your checking account will automatically be covered by your savings account.
Sign up for account alerts
If you sign up for an account alert, then most of the banks alert you for different kinds of problems such as low account balance via an email or text message.
Best big banks of 2024
Capital one
Product offered
Capital One bank offers one savings account, one checking account and one type of CD account, which can be in terms of ranging from six months to 5 years. For the young people, they have a checking and saving account option.
Details: capital one bank
The account is one of the ninth largest banks in the United States which include the physical location with the highest designing features. Capital one bank could not offer any fees or charges to open a new bank account Or maintain account and they have the capability to maintain a no balance.
Customers of the capital bank account have the authority of 70,000 to be taken out from the ATMs worldwide.
Why did we pick it?
The bank is one of the largest banks in the US and the most hybrid hybrid banks that provide the high APY of an online bank with the high high number of interest and benefits of a large bank. The bank has also ranked the one of the highest in the stadification of the customer in the J D power’s recent baking study.
Chase Bank
Product offers: Chase bank account offers eight types of checking account in which they include a savings account, three youth accounts and certificate of youth account within the terms ranging from month to 10 years.
Details
Chase bank is one largest bank in the US and is the second largest bank having the physical branches in the world. They have branches and many ATMs except in Alaska. Chase bank offers a full type of Deposit account.
with digital banking service with online mobile app and a banking service . If account fees are high, then the minimum balance will be dropped down a certain level, then the annual percentage and APY on the savings account and the certificate of the deposit will be below the national average.
Why did we pick it?
Chase Bank offers much and more branches in the US with the ATM network of 16,000
Chase Bank has finally appeared after the capital bank in the JD’s bank satisfaction study.
Ally bank
Product offered
Ellie offers an interesting savings checking and money market account. As well as the three kinds of CD accounts.
Details
Ally bank technically fits in the online banking category, and it is the one of the 22nd largest banks in the country with having a high and solid set of financial products, which help in the sale of the company . Customers, those who are interested in loans, mortgage and investing, have the access to support that service. The Ellie bank CD accounts are the most attractive service with no plenty of service and raise the rate offer, which has flexibility.
The online online system and the mobile app of the Ellie bank have allowed the customers to do every task in the app by online mode and with the help of this, they are not allowed to visit the physical branch.
Customers have the ability of 43,000 to take out from the ATM by having the all point network.
Why we picked it : Ally is a fully featured online bank with a high yield on the deposit account.
Citi bank
Product offer
Citibank offers a wide range of premium, checking and saving accounts every day
The premium offer is opposite for the Customer that has a sizable account balance. The bank also offered the CD accounts.
Details
Citibank is the third largest bank based on assets offered in a high number of checking accounts but it requires a high minimum balance to avoid the total monthly fees. They have a large number of branches available nationally worldwide with 65,000 bank ATMs that make banking access quite easy. If you are traveling overseas, then also CITIbank international policy will be offered to you. No doubt you are in which country you can use the mobile app and by using the mobile app, you can see the policy and proceed to the journey.
Why did we pick it ?
CITIbank offers a high and competitive yield in its CDs and the savings account. It has a wide number of branches and ATMs in the US and abroad making it easy for the Customer.
Big Bank vs. online bank
When you compare the online bank and big bank keep one thing in mind that each bank and institute have their own have their own fee structure rates, and the other policies big bank offers high and multiple branches and have more potential for an upfront new account bonus but they have the disadvantage of having high fees and low potential rates.
Online banks on the other hand, have low fees and have high potential rates but they have the limitation of having access banking service at the physical branch.
Conclusion
In this article, we studied the basics of finance and banking. First of all, we came to know about overdraft fees and the banks that have eliminated the overdraft fees with time. After that we came to know about online banks and the difference between online only banks and those banks that have a physical branch. Along with this, we also discussed the best big banks for 2024.
