Do Banks Still Charge Overdraft Fees?

Banking fees can be confusing and frustrating for consumers, and overdraft fees are no exception. While some banks still charge overdraft fees, there are also options available for those who want to avoid these fees altogether.

What are Overdraft Fees?

An overdraft occurs when you do not have sufficient funds to cover a transaction, but the bank still allows the transaction to go through anyway. In this case, the bank will charge you an overdraft fee. These fees can range from $35 to $38 per transaction and can add up quickly if you have multiple overdrafts in a short period. But according to SoFi, "You shouldn't be charged if you accidentally spend more than you have."

Banks with No Overdraft Fees

If you are tired of paying overdraft fees, consider switching to a bank with no overdraft fees. However, several options are available, including online-only banks and credit unions.

One popular online-only bank with no overdraft fees is SoFi. There are a few others that offer a checking account with no minimum balance requirement and no monthly maintenance fees. If you overdraft your account, the bank will decline the transaction rather than charge you a fee.

Another option is a credit union. Credit unions are nonprofit financial institutions that are owned and controlled by their members. Many credit unions offer checking accounts with no overdraft fees and lower fees in general compared to traditional banks.

Preventing Overdraft Fees

If you are not ready to switch to a bank with no overdraft fees, there are still ways to avoid overdraft fees at your current bank. Here are a few tips:

Link your checking account to a card or . This way, if you overdraft your checking account, the bank can transfer money from your savings account or charge your credit card to cover the transaction.

Opt-in to overdraft protection. While this may not eliminate overdraft fees completely, it can reduce the number of fees you pay. With overdraft protection, the bank will only charge a fee if you overdraft your account by more than a certain amount, usually around $5.

Monitor your account balance. Keep track of your account balance and only spend what you have. You can do this by checking your account balance online, using your bank's mobile app, or setting up alerts to notify you when your balance gets low.

Pros of Banks with No Overdraft Fees

While switching to a bank with no overdraft fees may seem like a no-brainer, it is important to consider both the pros and cons before deciding.

No overdraft fees: This is the obvious benefit of switching to a bank with no overdraft fees. You will not have to worry about being charged for overdrawing your account, which can save you significant money in the long run.

Lower fees in general: Many banks with no overdraft fees also have lower fees for other services, such as ATM and monthly maintenance fees. This can result in significant savings for those who use these services frequently.

Overdraft fees can be costly and inconvenient, but options are available for those who want to avoid them. If you are tired of paying overdraft fees, consider switching to a bank with no overdraft fees. Alternatively, you can prevent overdraft fees by linking your checking account to a savings account or credit card, opting into overdraft protection, or monitoring your account balance.