Free chequing accounts that don’t charge overdraft fees


Overdraft fees are back in the news, thanks to Senator Elizabeth Warren who asked JPMorgan CEO Jamie Dimon about the practice in May and Ally Bank who joined the list of institutions abandoning the practice in June.

Banks usually charge an overdraft fee when you exceed your checking account. Instead of having your debit card declined or the purchase canceled, your bank will cover the difference and charge you an overdraft fee, typically around $ 30 to $ 35.

These costs can quickly become expensive. An overdraft fee of $ 35 on a $ 100 purchase quickly becomes a $ 135 purchase. This markup is significantly higher than what a typical credit card would charge in interest.

In addition, you may not be immediately notified that you have discovered your account and instead accumulate multiple fees per day. Big banks tend to cap overdraft fees at four to six per day, but some allow as many as 12, according to ValuePenguin’s analysis of the policies of the 16 largest U.S. consumer banks.

And if you have multiple charges coming in on the same day, some banks process the most expensive transaction first, causing consumers to incur more overdrafts, according to a 2018 report from the Center for Responsible Lending.

Some banks automatically waived overdraft fees during the pandemic, but more than one still required customers to call and specifically request the waiver. And many of those protections have now expired.

But some banks offer free year-round checking accounts that don’t allow customers to incur overdraft fees. Here is a list of the top suppliers in July 2021:

1. Ally Interest Checking Account

  • Bank type: Online
  • Minimum account to open: $ 0
  • Current interest: 0.1% APY on balances less than $ 15,000
  • ATMs: Over 43,000 Allpoint ATMs at no charge (Ally is offering a refund of $ 10 per statement cycle for fees billed at other ATMs nationwide.)

2. Verification of Axos rewards

  • Bank type: Online
  • Minimum account to open: $ 50 (Axos also has an Essential Checking account that is free to open and does not charge overdraft fees, but does not earn interest.)
  • Current interest: up to 1.25% if you meet direct deposit and debit card requirements
  • ATMs: Unlimited refunds of all domestic ATM fees

3. Verification of improvement

  • Bank type: Online
  • Minimum account to open: $ 0
  • Current interest: 0% (Betterment’s checking account debit card offers cash back on debit card purchases every month.)
  • ATMs: Unlimited ATM fee refunds worldwide

4. Discover the bank’s current account

  • Bank type: Online
  • Minimum account to open: $ 0
  • Current interest: 0% (Discover checking account offers 1% cash back on up to $ 3,000 in debit card purchases each month.)
  • ATMs: More than 60,000 toll-free ATMs

5. Fidelity Cash Management Account

  • Bank type: Online
  • Minimum account to open: $ 0
  • Current interest: 0.01% APY on balances less than $ 100,000
  • ATMs: Unlimited refunds of all domestic ATM fees

6. The Hassle-Free Key Bank Account

  • Bank type: Online; brick and mortar
  • Minimum account to open: $ 10
  • Current interest: 0%
  • ATMs: Over 40,000 KeyBank and Allpoint ATMs nationwide

7. Cash

  • Bank type: Online
  • Minimum account to open: $ 0
  • Current interest: 0.1% with a minimum balance of $ 0.01
  • ATMs: More than 19,000 toll-free ATMs

Capital One’s 360 Checking account is free and offers a range of overdraft options, including automatic rejection enrollment to avoid overdraft fees. But banking is not completely free. Capital One charges an insufficient funds fee of $ 9 for bad checks regardless of overdraft coverage.

TD Bank also plans to release a vital bank account next month that won’t allow customers to overdraft, but will incur a monthly fee of $ 4.95. The bank is also revising its overdraft fee policies on other accounts, including lowering the maximum number of times customers can be charged overdraft fees each day and only triggering fees if customers have overdraft. over $ 10.

Chime’s free checking account also allows customers to overdraw their accounts up to $ 200 without incurring an overdraft fee for those who receive at least $ 500 in monthly direct deposits.

It should be noted that many of the banks listed above are online-only banks or banks with a limited physical branch footprint. Big banks such as Bank of America, Chase, Citi, US Bank, and Wells Fargo also offer checking accounts that don’t charge overdraft fees, but do charge a management fee. However, these monthly fees may be waived in certain circumstances, such as for teens or if you sign up for specific banking programs.

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