8 Top Banks for Overdraft Fee Avoidance in August 2023

8 Top Banks for Overdraft Fee Avoidance in August 2023

The Best Banks for Avoiding Overdraft Fees

Overdrawing from your checking account can be a costly mistake, as banks often charge hefty overdraft fees. However, if you prioritize finding a bank account with minimal or no overdraft fees, there are several options available to you. In this article, we will explore the best banks that either do not charge overdraft fees or provide free overdraft protection. We will also discuss why you should trust our expert panel and their advice on choosing the right bank for you.

Our Top Picks

Here are our top picks for the best banks for avoiding overdraft fees:

1. Ally
2. Axos
3. Capital One
4. Discover Bank
5. Alliant
6. Connexus
7. Citi
8. Truist

With the exception of Connexus Credit Union, all of our top picks have either eliminated overdraft fees or offer free overdraft protection. It’s important to note that all the financial institutions on our list are protected by FDIC or NCUA insurance, ensuring the safety of your money.

Expert Advice on Choosing a Bank

To provide you with the best advice on choosing a bank, we consulted banking and financial planning experts. Here’s what they had to say:

Mykail James, MBA, certified financial education instructor, BoujieBudgets.com:

“The No. 1 thing about a checking account is you should know what provider the debit card is coming from. And a lot of people don’t think about that because there are places that don’t accept MasterCard or don’t accept an Amex.”

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Sophia Acevedo, certified educator in personal finance, banking reporter, Personal Finance Insider:

“Think about which bank accounts you’d like to open and which features you’re looking for. Let’s say you sometimes overdraw from your bank account. When you’re deciding on a bank, you’ll want to see if the bank offers a checking account that doesn’t charge overdraft fees. You could also see if the bank has an overdraft protection program where you can manageably waive fees by meeting certain requirements.”

Tania Brown, certified financial planner at SaverLife:

“For most people, it falls into five categories: location, interest rates, services, technology, and relationships. Next, prioritize what’s important, and you will have your answer. For instance: – If multiple regional and national locations are important: Banks typically have more locations than credit unions. – If the most important thing to you is a high-interest rate: Credit unions, on average, offer better interest rates than banks. – If a lot of services (commercial banking, business banking, investment services, etc.) are valuable to you: Larger banks offer more services than most credit unions. – If feeling like a person, not a number, matters to you: Credit unions are known for great personalized customer service. – If you are a tech junkie: Larger banks typically offer more tech bells and whistles for online users than credit unions.”

Roger Ma, certified financial planner with lifelaidout® and author of “Work Your Money, Not Your Life”:

“I would look at the ATM branch locations and then minimum balance amounts to not incur a monthly fee … I think there’s other stuff that could make life easier, whether it’s free checks, online bill pay, are they in the Zelle network?”

Sophia Acevedo, certified educator in personal finance, banking reporter, Personal Finance Insider:

“I would go for a checking account that either doesn’t have any monthly service fees or offers multiple ways to waive the fee. I would also look at customer support availability and mobile app ratings.”

Methodology: How Did We Choose the Best Banks for Avoiding Overdraft Fees?

At Personal Finance Insider, our mission is to help smart people make the best decisions with their money. To select the best banks for avoiding overdraft fees, we conducted extensive research on over two dozen financial institutions and service providers.

We narrowed down our picks by looking at minimum opening requirements and overdraft protection programs. Additionally, we considered the overall banking experience using our rating methodology, which includes criteria like customer support availability, mobile app ratings, and ethics.

For a complete understanding of our ratings methodology, you can refer to our full ratings methodology for checking, business checking, savings, and money market accounts.

Bank Alternatives for Avoiding Overdraft Fees

While our top picks stood out for their appealing features, we also want to highlight some bank alternatives worth considering:

• SoFi Checking and Savings: SoFi doesn’t charge overdraft fees but may decline purchases if you overdraw by more than $50.
• TIAA Yield Pledge® Checking Account: TIAA Bank offers free overdraft protection, but our top picks have lower minimum opening deposit requirements.
• Quontic High-Interest Checking Account: Quontic doesn’t charge overdraft fees but requires a $100 minimum opening deposit.
• and more…

Bank Trustworthiness and BBB Ratings

It’s essential to consider trustworthiness when choosing a bank. The Better Business Bureau (BBB) assigns grades to companies based on their response to customer complaints, honesty in advertising, and transparency in business practices.

Citi has an F rating due to a high volume of customer complaints on the BBB website, while Ally has an A rating but with unresolved customer complaints. It’s worth noting that Citi and Capital One have been involved in recent public controversies related to security and banking practices.

In conclusion, finding a bank that doesn’t charge overdraft fees or offers free overdraft protection is crucial for avoiding unnecessary costs. By considering our expert panel’s advice and exploring our top picks, you can make an informed decision that suits your banking needs and preferences.

Disclaimer: Our experts answer readers’ banking questions and write unbiased product reviews. While we may receive a commission from our partners, our opinions are our own. Terms apply to offers listed on this page.

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