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On Dec. 1, Capital One became the first large bank to completely eliminate all overdraft fees and non-sufficient fund fees (beginning early 2022), in a move that may protect itself from any forthcoming scrutiny from the Consumer Financial Protection Bureau (CFPB).
On the heels of that announcement, JPMorgan Chase said that it will give account holders more ways to avoid paying overdraft service fees: Starting in 2022, customers will have a full day after overdrawing their account to replenish their balance, and customers can access their direct deposit payroll funds two days early.
Though these are the two banks in the news as of late, both join a trend of some smaller banks dropping their overdraft charges to attract more consumers. In June of this year, online-only Ally Bank put an end to overdraft fees on all accounts in an attempt to help keep people from falling behind financially as the pandemic continued.
An overdraft fee is a common banking fee that gets charged when you spend more than the amount available in your account. This results in a negative balance, and you may be hit with a steep overdraft fee up to $35 (sometimes per transaction).
Being short on funds can happen easily if you aren’t keeping an eye on your bank balance, and those living paycheck to paycheck are most vulnerable. In fact, 43% of vulnerable households with checking accounts report having overdrafted in the past year, with 9.6 overdrafts on average, according to the 2021 FinHealth Spend Report. At a $35 fee per overdraft, that’s nearly $350 per year consumers are paying because they didn’t have enough money available to cover a purchase, payment or withdrawal.
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7 checking accounts with zero overdraft fees
1. Capital One 360 Checking® Account (beginning early 2022)
Capital One 360 Checking will charge no overdraft fees or non-sufficient fund fees beginning early 2022. It currently has no monthly maintenance fees, minimum deposit or balance requirements. Account holders earn 0.10% APY and have access to its free ATM network of 70,000+ Capital One®, MoneyPass and Allpoint® ATMs.
2. Ally Interest Checking Account
The Ally Interest Checking Account has zero overdraft fees, monthly maintenance fees, minimum deposit or balance requirements. Account holders earn 0.10% APY on balances less than $15,000 and 0.25% APY on balances over $15,000. Its free ATM network includes 43,000+ Allpoint® ATMs.
3. Discover Cashback Debit Account
The Discover Cashback Debit Account does not charge for its overdraft protection that you can opt in to — money is taken from your Discover savings account to cover an overdraft. There are no monthly maintenance fees, and account holders don’t need to make a minimum deposit or maintain a minimum balance. With this checking account, you can also get rewards for your spending: Earn 1% cash back on up to $3,000 in debit card purchases each month. Discover’s free ATM network includes 60,000+ Allpoint® and MoneyPass® ATMs.
4. Axos Bank Rewards Checking
With Axos Bank Rewards Checking, an online bank, customers won’t pay monthly fees or overdraft fees. There are no minimum balance requirements, but you must deposit $50 to open an account. There are also tiered APY rates where account holders can earn up to 1.00% APY, if they meet specific requirements: Direct deposit a minimum of $1,500 per month into the account and use the debit card for at least 10 monthly transactions.
5. Betterment Checking
Betterment Checking customers can take advantage of this online-only account that has no overdraft fees or account minimum requirements. Betterment will also reimburse all your out-of-network ATM fees worldwide, including foreign transaction fees. Account holders can earn automatic cash back rewards when they spend on popular brands, such as Dunkin’, adidas, Walmart, Sam’s Club and Staples. Plus, get cell phone insurance at no cost when you pay your cell phone bill with Betterment’s debit card.
6. Wealthfront Cash Account
Wealthfront Cash Account offers customers no account fees or overdraft fees. You can earn 0.10% APY on all account balances, as well as get access to 19,000 free ATMs. Wealthfront also makes it easy to invest faster by allowing account holders to transfer (for free) their extra cash into a connected Wealthfront investment account.
7. Alliant Credit Union High-Rate Checking
The Alliant Credit Union High-Rate Checking has no monthly service fee, minimum balance requirement or overdraft fees. The checking account also offers a higher-than-average 0.25% APY on all balances, and account holders can access over 80,000 free ATMs nationwide.
Information about the Capital One 360 Checking® Account, Ally Interest Checking Account, Discover Cashback Debit Account, Alliant Credit Union High-Rate Checking Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Ally, Capital One, Discover, is a Member FDIC. Alliant Credit Union is a Member NCUA.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.