In this side-by-side comparison, we review the 10 Best Checking Accounts with No Overdraft Fees (for 2020). By the end of this article, you will know exactly which checking accounts will not charge you for overdraft fees. So, what are we waiting for? Let’s dive in!
What Is an Overdraft Fee?
Understanding an overdraft fee is straightforward. An overdraft fee is when the bank covers the cost of a specific transaction because your checking account has a low balance and cannot afford to.
How Does A Bank Overdraft Work?
All financial institutions handle overdraft fees differently, but for the most part, they charge their customers a flat fee for each overdraft violation. Some banks are more forgiving – like the ones we review below – while others are not. Specific banks offer free overdraft protection services, or a line of credit with an associated interest rate, while others allow you to link a saving or brokerage account, and will automatically transfer funds one your checking account is deemed to have insufficient funds.
The ones that charge you for each overdraft transaction are the banks you need to avoid if you want to save money and bank with confidence.
Looking Ahead: Top Checking Accounts with No Overdraft Fees
Unfortunately, millions of Americans are strapped for cash. To make matters worse, most banks charge their loyal customers with an overdraft fee if their checking account dips below $0 is showing a negative balance.
However, there are still some financial institutions that recognize most Americans are not financially independent. Fortunately – for you – these banks offer straight forward checking accounts with no overdraft fees. Alas, gone are the days where you worry about a negative balance or paying a hefty fee.
Backed by hours of research, expert testimony, and renowned customer service, we cut through the noise and narrowed down the best checking accounts for avoiding overdraft fees.
Is There A Bank with No Overdraft Fees?
Yes, absolutely! These 10 banks all offer a checking account with no overdraft fees: Chime, Simple, Discover, Capital One, Charles Schwab, Axos, Ally, TIAA, Fidelity, and Aspiration. These financial institutions make it a top priority to limit their fees – and believe me, they do just that with their checking accounts.
Top 10 Best Checking Accounts with No Overdraft Fees
With Axos Bank you can choose between between five different checking accounts:
- Essentials Checking
- Rewards Checking
- First Checking
- CashBack Checking
- Golden Checking
However, today we are highlighting the first three choices: Essentials, Rewards, & First Checking. These checking accounts all offer no overdraft or insufficient funds fees. Better yet, these elite checking accounts also have no monthly maintenance fees, allowing you to get the best bang for your buck.
Alas, if you are looking for more than just a checking account, then look no further. Axos Bank also offers their customers a high yield saving accounts, mortgages, mortgages refinancing, auto loans and more. Axos Bank is truly a one stop shop for your dire financial needs.
Chime – a hot new FinTech Firm – has attracted a legion of fans due to its zero-fee checking account. As your future bank, Chime rolled out a brand new ‘spotMe’ feature, which means they will spot you $100 when your checking account is low. Apart from this nifty feature, Chime touts no hidden fees, no monthly fees, no foreign transaction fees, and a $0 minimum opening balance.
As a digital-first bank, Chime is well suited to allow you to bank on the move all from your mobile device. Even with no local branches, Chime makes it incredibly easy for you to deposit checks or withdrawal money.
To round out why we like Chime, this FinTech firm also has an early direct deposit program for its customers. Once enrolled in this program, you are eligible to receive your paycheck up to two days early. Chime also has a feature on their mobile device that allows you to pay your friends (‘Pay Friends’) for free. Watch out Venmo, because with Chime it is free.
Finally, Chime has a network of over 38,000+ fee-free MoneyPass® and Visa® Plus Alliance ATMs, and over 30,000+ lucrative cash back locations. Easily locate an ATM with their built in ATM Finder in the Chime smartphone application.
Looking for another mobile friendly bank? Simple is hands down one of the most user-friendly digital banks on the market. Like Chime, this bank offers a simple solution – no overdraft fees. Scratch that – no fees at all.
Apart from their no fee checking account, Simple also offers their users with a robust suite of financial tools, so they can budget appropriately, save more, and cut back on useless expenses. Users simply input their monthly bills, expenses, income, and the award-winning mobile application will create a detailed budget for you to follow. This feature is best for individuals who need some accountability when it comes to saving money.
As you can see, Simple is well positioned to fulfill your banking needs. With almost no fees, a great checking account, awesome financial tools, best in class financial products – like a high yield saving account – this digital-first bank warrants some serious consideration. Above all, Simple values their customers and their team are motivated more than ever to simplify our banking experience.
As one of the most well-known financial institutions in America, Capital One’s 360 Checking Account approaches overdraft fees in four unique ways.
- Automatically Decline: If your account lacks the necessary funds then it will decline your transaction automatically. This protects you from entering a negative balance on your checking account.
- Grace Period: Capital One will give you one full business day to transfer money into your checking account to cover the cost of your overdraft transaction. If you fail to do this, then sadly you will face a $35 flat fee.
- Transfer from Savings Account: Use available funds from your savings account to cover the cost of your overdraft expense. This is straightforward and can be done either from your mobile device or on the Capital One website.
- Overdraft Line of Credit: Capital One will offer you a loan to offset the cost of your overdraft. However, with this loan, you will have to pay interest.
With Capital One 360 Checking Account, you have plenty of options to avoid paying a steep fee for a common overdraft. Apart from their checking account, Capital One also offers auto loans, business services, credit cards, and a saving account. Rest easy, your financial needs will be met with Capital One.
Most checking accounts do not offer rewards; however, Discover’s does. Redefining what it means to have a checking account, Discover offers a sweet cashback debit online checking account.
With Discover, you will earn 1.0% cashback on all purchases (up to $3,000 per month). If that isn’t enough, this account has no fees. Yes, you read that right – no fees.
Here is how Discover handles the nuances of an overdraft. With your Cashback Debit Checking Account, you can link it to a saving or money market account which you can then use those funds to cover your overdraft. This feature is a great way to protect yourself from a hefty fee.
Additionally, with Discover you can open a retirement account, savings account, or even a lucrative money market account. Fret not, if you are in dire need of support, simply call their 24/7 customer service hotline.
Known primarily as a world class brokerage firm, Charles Schwab also offers a checking account. With Schwab, you do not have to worry about a monthly service fee, account minimum, or a foreign transaction fee. Better yet, enjoy unlimited ATM fee rebates worldwide.
To protect you from an overdraft fee, Charles Schwab will automatically pull money from your Schwab brokerage account if you have one. However, it is important to note, that if your brokerage account is also low on funds, then you may encounter a $25 insufficient funds fee.
As you can imagine, the Charles Schwab checking account is best for individuals who already rely on Schwab for their investing needs. On a side note, if you are looking to start investing, then Charles Schwab is a great place to start as they are notorious for low-fees, customer service, and a great platform.
Paving the way for digital banking, Ally offers an overdraft protection plan. Once you sign up, Ally will link both your saving and checking account. So, once your checking account balance begins to near towards zero, Ally will immediately move funds (approximately $100 each time) from your saving account into your checking account to protect you from an overdraft violation.
Does the Ally Overdraft Protection Plan cost money? No! Ally will move funds from your saving account into your checking account free of charge. The only downside with Ally is that if you do not enroll into their overdraft protection plan, then you will face a small $25 overdraft fee, but again, this is easily avoidable.
Aside from their standard checking account, Ally also offers one of the best investing experiences, mortgages, loans, competitive CD rates, high yield saving accounts, and everything in between.
Pioneering the zero-fee banking experience, Fidelity offers a checking account with overdraft protection. If you sign up for this service, you will link your checking account to either a saving or brokerage account. So, if you encounter an overdraft, they can easily transfer money from one of your linked accounts to help offset the transaction.
If overdraft protection is not for you, do not worry. Instead, Fidelity will just decline your card, allowing you to avoid an overdraft situation.
As a leader in the investment industry, Fidelity offers a world-class user experience apart from their checking account. Whether you are on the market for a new online broker or looking for a checking account with no overdraft fees, Fidelity is a top choice.
Aspiration is truly a revolutionary FinTech firm that offers a no overdraft fee checking account. With Aspiration you set the price. Yes – let me reiterate – you set the price. So, if you want zero fees for all your financial needs then this is your best bet. Or, if you have a giving heart and want to contribute to making this world a better place, then you can elect to pay Aspiration a minimal fee.
Standout Benefits of Aspiration:
- 0.25% APY Cash Management
- Spend & Save Account – No Overdraft Fees
- Professionally Managed Investing Funds – These funds are all socially conservative and completely fossil fuel free
- Cash Back Rewards
- Five Free ATM Withdrawals a month
Here is the catch. Aspiration is a socially responsible organization (certified B Corp), which means they put 10% of their earned revenue towards social causes, such as health, education, water, poverty, human rights, and the environment. Aspiration is in the business of paying it forward.
As you can see, Aspiration operates at the intersection of financial services and social responsibility. While delivering a phenomenal user-experience, they are motivated more than ever to bring forth everlasting change in local communities worldwide.
TIAA Bank offers an interest-bearing checking account with free overdraft protection. Like the other accounts we have mentioned above, to qualify for this service you need to link a savings account. As you can imagine, if you are low on funds, TIAA will automatically transfer funds from your linked account to your checking account so you can avoid an overdraft penalty.
With a TIAA checking account you get an interest rate (around 1.0% APY), no monthly maintenance fees, mobile check deposits, a nifty debit card, ATM reimbursements and more.
Summary: Best Checking Accounts with No Overdraft Fees
As you can see, there are multiple options you have – as a consumer – if you are looking for a checking account with no overdraft fees. The accounts we listed above prioritize your preferences and created a financial product that meets your needs.
Ultimately, you want to choose a checking account that aligns with your personal financial needs. Are you looking for an account with physical branch locations? Or are you fine banking completely from your mobile device or personal computer? These are just a few questions you need to consider before you make a smart choice.