Overdraft fee-free banking: Banks that have eliminated overdraft fees (2024)

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• Overdraft fees significantly affect consumers, according to research by the Consumer Financial Protection Bureau (CFPB).
• The CFPB is taking action to help reduce overdraft charges at banks and financial companies.
• Some financial institutions have made changes to overdraft programs by reducing or eliminating fees.

Research by the Consumer Financial Protection Bureau (CFPB) has found that consumers are heavily impacted by overdraft fees. The best banks for avoiding overdraft fees have made changes to their overdraft programs and policies to help customers.

If you're trying to find a zero overdraft fee institution, we've created a list of banks that have made beneficial changes to their overdraft services. We'll also explain how these fees have affected consumers and the role federal regulatory agencies have taken to help customers.

How overdraft charges affect consumers

According to the CFPB, around 23 million households have to deal with overdraft fees in any given year.

David Rothstein, senior principal at the nonprofit organization Cities for Financial Empowerment Fund and a leader of the Bank On Initiative, points out that overdraft charges can be very costly for consumers due to a bank's fee structure. The fee can sometimes be up to $38 per transaction, and if you overdraw from your account several times in the same day, the cost can add up.

Research by the CFPB also shows that overdraft fees can be a significant challenge for low-income people. According to a 2023 CFPB study, 10% of people with a household income above $175,000 were charged an overdraft or insufficient funds fee in the last year. In comparison, 34% of people with a household income below $65,000 had to pay overdraft fees in the last year.

For people who are unable to restore their account to a positive balance and pay these fees, it could also potentially drive them out of banking through involuntary account closures, leaving them unbanked.

Since the role of the CFPB is to help consumers have access to fair financial products and services, the federal regulatory agency has taken action in recent years to help tackle this issue for consumers.

In 2022, the CFPB instigated an initiativeto create rules and industry guidance regarding overdraft charges. In the same year, the CFPB also ordered Regions Bank and Wells Fargo to pay consumers harmed by overdraft fees in years prior.

In January 2024, the CFPB proposed a rule that targets overdraft fees. In the proposal, the CFPB also mentions setting a benchmark fee, which could be as low as $3, $6, $7, or $14. If adopted, the rule could take effect in October 2025.

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Financial institutions that have eliminated overdraft fees

A financial institution may charge an overdraft fee when it covers the overdraft, so your transaction goes through. The following is a list of no-overdraft-fee banks that have eliminated fees in the last few years. Several of these financial institutions are among the best online banks.

• Alliant: In August 2021, Alliant eliminated overdraft fees on all checking and savings accounts.
• Ally Bank: In June 2021, Ally stopped charging overdraft fees on all bank accounts.
• Capital One: In December 2021,Capital One got rid of all overdraft fees for consumer banking customers.
• Citibank: During the summer of 2022, Citi became a bank without overdraft charges. It eliminated overdraft fees, overdraft protection fees, and non-sufficient fund fees
• Discover Bank: In June 2019, Discover ended bank fees on savings, checking, CD, and money market accounts.
• Truist Bank: In June 2022, Truist launched two checking accounts without overdraft charges. In April 2022, Truist also ended fees for returned items, negative account balances, and overdraft protection transfers.
• Quontic Bank: In January 2022, Quontic has eliminated overdraft fees on bank accounts.

Financial institutions that have eliminated non-sufficient funds fees

A financial institution might charge a non-sufficient fund fee when it denies a transaction on your checking account because you don't have enough money to maintain a positive balance. The following financial institutions have eliminated non-sufficient funds fees.

• Bank of America: Bank of America ended non-sufficient fund fees as of February 2022 and reduced overdraft fees from $35 to $10 as of May 2022.
• Chase Bank: In 2021, Chase ended the returned item fee (another term often used for non-sufficient fund fees). Chase still has a $34 overdraft fee, but it tweaked its current overdraft protection programs to provide more coverage. For example, customers who overdraw their account by $50 or less no longer have to pay an overdraft fee. If you overdraw your account by more than $50 and restore your account balance before the end of the next business day, you also won't have to worry about overdraft fees.
• Fifth Third Bank: In 2022, Fifth Third Bank got rid of non-sufficient fund fees for all consumer bank accounts. Fifth Third Bank still has a $37 overdraft fee, but it has overdraft programs to waive these charges.
• First Citizens Bank: In 2022, First Citizens Bank eliminated non-sufficient fund fees, and lowered its overdraft fee from $36 to $10. First Citizens Bank offers overdraft protection programs to avoid overdraft fees.
• M&T Bank: M&T got rid of non-sufficient fund fees, and reduced overdraft fees to $15 in 2022. M&T also began offering free overdraft protection that allowed consumers to link their checking account to a savings account.
• PNC Bank: As of 2022, PNC no longer charges non-sufficient fund fees on bank accounts. PNC Bank still has a $36 overdraft fee, but it has free overdraft protection programs available to avoid these costs.
• Regions Bank: As of June 2022, Regions no longer charges non-sufficient fund fees. At Regions Bank, you'll have to be mindful of a $36 overdraft fee. However, there are overdraft protection programs available to help you avoid these fees.
• Wells Fargo Bank: Wells Fargo has stopped charging non-sufficient funds fees as of 2022. Wells Fargo still charges a $35 overdraft fee, but there are free overdraft protection programs available to minimize fees.

Changes in overdraft fees: FAQs