Trends in Overdraft Fees: Which Banks Ditched Them (and Which Didn’t)

Digital banks really got the no-overdraft fee trend rolling and now many of the largest banks have reduced or abandoned these charges, along with a handful of smaller institutions. The Financial Brand pulled together a comparison chart and list to assist other institutions to plot their strategy.
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For a growing number of financial institutions, overdraft fees are becoming a thing of the past. Those walking away from the fees or severely cutting them are a very small percentage of the overall industry, but they include some of the biggest names in banking.

So far, most institutions are holding onto their fees. However, the pressure to change — coming from digital bank competition from the likes of Chime, Varo and Ally, as well as from increased government scrutiny — is prompting the most sweeping changes to these long-criticized fees ever seen.

In addition, the pandemic prompted many institutions to adjust their overdraft terms and pricing. Some have made the changes permanent.

Citibank is the largest institution so far to completely walk away from all overdraft fees. Many others have been adjusting their terms, making them more consumer friendly and flexible. That’s in addition to the various linking arrangements between checking and savings and lines of credit that many financial institution have long offered.

Groundswell:

Digital bank competition, pandemic impact, and political pressure combined to generate momentum for seismic overdraft change.

The average cost of a customer overdrawing their bank account has gotten slowly more expensive over time, hitting the most recent high of $33.58 in October 2021, according to BankRate. The impact of sharply scaling back these fees is dramatic for many institutions, and community banks in particular are wrestling with the decision.

The CEO of Bay State Savings Bank, Peter Alden, told Marketplace in 2022 that overdraft-related fees make up 15% of the Massachusetts bank’s income. It currently charges a $35 fee if a customer overdraws their account for more than $5.

The stream of news about which banks and credit unions have dropped or altered their overdraft pricing versus those that have chosen to keep them has created a confusing situation. To help sort through the noise, The Financial Brand researched the websites of a selected group of traditional banks, digital banks and credit unions of varying sizes to see where they stand with overdraft fees.

The table below summarizes what we found for 26 institutions. Below that, capsule descriptions from the institutions’ websites provide more detail. The entries also provide a sense of how these institutions present their overdraft policy to the public.

03/15/22 Editorial Note: Amplify Credit Union does cover overdraft fees and customers can find more information on the website’s ‘Help Center’.

Financial institutions overdraft policies

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Alliant Credit Union

Headquarters: Chicago
Total assets: $14.6 billion
Verdict: Eliminated overdraft fees altogether

What they say: “We’re keeping it simple. Our no-overdraft fee policy applies to all checking and savings accounts, not just those of current members or members who maintain high balances. We haven’t added complicated conditions you have to meet to avoid overdraft fees. We’re simply eliminating them entirely. All of them. Effective August 2, 2021, overdraft fees are a thing of the past for Alliant members.”

Any special terms or conditions? No.

Ally Bank

Headquarters (Ally Financial): Detroit
Total assets: $180.8 billion
Verdict: Eliminated overdraft fees altogether

What they say: “We reimbursed overdraft fees in early 2020, as a way to help during the pandemic. Now, they’re gone for good. We don’t charge overdraft fees or fees for insufficient funds, ever. We’re not going to increase any fees we do have or add new fees to offset this change. No requirements; no restrictions.”

Any special terms or conditions? “If you do have an overdraft on your account, the only difference is that we don’t charge you a fee. Keep in mind, if a check or ACH transaction is returned to a merchant or to your account at another financial institution, they may charge you a fee for the returned transaction.”

Amplify Credit Union

Headquarters: Austin
Total assets: $1 billion
Verdict: Eliminated overdraft fees altogether

What they say: “Our goal is to remove the obstacles that stand between our members and financial success, so we turned off all our bank fees. Because it’s not just about giving back — sometimes, it’s about not taking in the first place. Fee-free banking is a standard benefit for every member of the credit union.”

Any special terms or conditions? No.

Axos Bank

Headquarters: San Diego
Total assets: $13.9 billion
Verdict: Eliminated overdraft fees altogether

What they say: “No fees. Unlimited ATM fee reimbursements. Essential checking gives you all of the features with none of the fees.”

Any special terms or conditions? Not clear.

Bank of America

Headquarters: Charlotte
Total assets: $3.2 trillion
Verdict: Reducing overdraft fee from $35 to $10 (starting May 1, 2022)

What they say: “Bank of America … announced significant changes to its overdraft services, including plans to eliminate non-sufficient funds (NSF) fees beginning in February, and to reduce overdraft fees from $35 to $10 beginning in May 2022.”

Any special terms or conditions? Not clear.

Capital One

Headquarters: McLean, Va.
Total Assets: $421.6 billion
Verdict: Eliminated overdraft fees altogether

What they say: “Capital One announced it will completely eliminate all overdraft fees and non-sufficient fund (NSF) fees for its consumer banking customers.”

Any special terms or conditions? “For customers not enrolled, transactions that would overdraw an account will be declined and no fees will be assessed.”

Chase Bank

Headquarters: New York City
Total assets: $3.39 trillion
Verdict: Charges a $34 insufficient funds fee with exceptions

What they say: “Chase is promoting a series of changes that could help consumers who don’t have a large cushion of cash in their checking accounts avoid triggering fees for overdrafts. Among other things, the bank has created a bigger buffer for shortfalls and eliminated a non-sufficient funds fee.”

Any special terms or conditions? “Our Standard Overdraft Practice may pay, for a fee, overdraft transactions at our discretion based on your account history, the deposits you make and the transaction amount.”

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Chime

Headquarters: San Francisco
Total assets: $5.8 billion
Verdict: No overdraft fees up to a certain amount

What they say: “Overdraft up to $200 with no fees: Traditional banks took $11 billion in overdraft fees in 2019. At Chime, we do things differently. Instead of charging you an overdraft fee, we allow you to overdraft up to $200 with no fees.”

Any special terms or conditions? “Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each month. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Friends transfers, or Chime Checkbook transactions.”

Citibank

Headquarters: New York City
Total assets: $2.26 trillion
Verdict: Eliminated overdraft fees altogether

What they say: “For twenty years, Citi has put measures in place to minimize overdraft fees for its consumers in order to put their financial wellness first. In fact, the overdraft revenue Citi collects has been among the lowest, compared to its competitors.”

Any special terms or conditions? “Transactions that exceed the amount of funds in your account will not be approved.”

Covantage Credit Union

Headquarters: Antigo, Wis.
Total assets: $2.5 billion
Verdict: Eliminated overdraft fees altogether

What they say:
“We offer just one type of checking account for all eligible members in Wisconsin, Michigan and beyond — Fee-Free Checking. Maintain any balance you wish without penalty. Plus, you get the anytime access and convenience you expect from CoVantage. We not only don’t charge “hidden” fees or monthly service charges, but there are NO FEES at all with our checking!”

Any special terms or conditions? No

Dollar Bank

Headquarters: Pittsburgh
Total assets: $10.2 billion
Verdict: Eliminated overdraft fees altogether

What they say: “Never worry about overdraft fees, because there aren’t any. We won’t let a debit card purchase bring your balance below what you have available, so you’ll never be charged an overdraft fee.”

Any special terms or conditions? “Certain transactions are not subject to decline. If any such transaction causes a negative balance, no overdraft fee will apply.”

Fifth Third Bank

Headquarters: Cincinnati
Total assets: $169.4 billion
Verdict: $37 overdraft fee

What they say: “For all Fifth Third Checking accounts, the fee for each overdraft will be $37, per item, regardless of the number of past occurrences.”

Any special terms or conditions? “We will only charge overdraft fees for a maximum of three overdrafts per day. If your consumer deposit account is overdrawn for seven consecutive days, we will charge a $25 extended overdraft fee on the next business day.”

First National Bank of Omaha

Headquarters: Omaha
Total assets: $25 billion
Verdict: $33 overdraft fee

What they say: “Our Overdraft Item Fee is $33 per item (max 4 per day). We will not charge you this fee if your balance is overdrawn by $20 or less or the transaction overdrawing the account is $20 or less.”

Any special terms or conditions? “While we don’t encourage overdrafts, we understand that unanticipated expenses or unforeseen problems can leave you with not enough money in your checking account. Our goal is to assist you in avoiding unexpected Overdraft or Return Item fees as well as the inconvenience of having transactions declined or returned unpaid.”

Frost Bank

Headquarters: San Antonio
Total assets: $42.4 billion
Verdict: $35 fee after account is overdrawn by more than $100

What they say: “Fee-free overdrafts up to $100. You’re automatically enrolled in the overdraft grace feature if you have a Frost Personal or Plus Account, have not opted out of our standard overdraft courtesy program and you have at least $500 in direct deposits posting to your account within the past 33 days.”

Any special terms or conditions? “Sometimes life gets a little messy and it doesn’t stop at $100. If you need to overdraw your account by more than $100, to cover your rent, gas or groceries, we’ll strive to make sure that payment doesn’t bounce. You’ll be charged a $35 fee for each additional overdraft.”

Huntington Bank

Headquarters: Columbus, Ohio
Total assets: $175 billion
Verdict: $36 fee after account is overdrawn by more than $50

What they say: “We want to help you avoid overdraft fees. So, as a Huntington customer, if you accidentally overdraw your account by $50 or less, you won’t be charged an overdraft fee thanks to our $50 Safety Zone. And, if you have an overdraft that is more than $50 or possible returned transactions, you have more time to fix it, avoid an overdraft or return fee, and have your transactions paid.”

Any special terms or conditions? “Fee is charged if we allow a transaction to go through even though you don’t have enough money in your account after the 24-hour grace period and $50 safety zone.”

Liberty Bank

Headquarters: Middletown, Conn.
Total assets: $7.4 billion
Verdict: Eliminated overdraft fees altogether

What they say: “Stay in balance with a bank account with NO overdraft fees.”

Any special terms or conditions? “Liberty Bank will decline or return transactions when there is not enough money in the BankSmart Account to cover the charge. While this account prevents you from overdrawing in most cases, there may still be times when your account could have a negative balance. This could happen if a transaction is approved for one amount, but the actual charge is more than the amount of money in your account.”

M&T Bank

Headquarters: Buffalo, N.Y.
Total assets: $120.1 billion
Verdict: $15 fee after account is overdrawn by more than $5

What they say: “This account includes many conveniences of traditional checking accounts like online bill pay and debit card access.”

Any special terms or conditions? “If you do not have sufficient funds available in your account to cover a transaction, the transaction will be declined in most cases. In the case that your account is overdrawn, you will not be charged an overdraft fee.”

Monzo

Headquarters: London, U.K.
Total assets: $4.95 billion

Verdict: Eliminated overdraft fees altogether

What they say: “If you’re eligible you could have an overdraft limit up to £1,000. We won’t charge you any extra fees for going into your overdraft, and we’ll always tell you when you go into it.”

Any special terms or conditions? “As always, this won’t apply to everyone and we’re very careful about only giving people what we’re confident they can safely afford to borrow.”

PNC Bank

Headquarters: Pittsburgh
Total assets: $466.7 billion
Verdict: $36 fee after account is overdrawn by more than $5

What they say: “Many banks will charge you multiple overdraft fees a day. Others may promise no overdraft fees but will return all items leaving you with unpaid bills. Low Cash Mode gives you more control when your balance is low. $0 non-sufficient funds fee, maximum one $36 overdraft item fee per day, customized alerts when your balance is low and 24 hours minimum extra time to bring your balance to at least zero.”

Any special terms or conditions? “PNC will honor decisions to pay items at our discretion and does not guarantee that all items will be paid.”

Power Financial Credit Union

Headquarters: Pembroke Pines, Fla.
Total assets: $900 million
Verdict: $10 fee after account is overdrawn by more than 10 days

What they say: “If you’re a member, we don’t charge you a fee. It’s really that simple.”

Any special terms or conditions? “We will no longer charge you a fee of $35 each time we pay an ATM or debit card overdraft transaction. You have up to 30 days to eliminate the shortfall in your account. There is a $10 recurring fee every 10 days an account remains overdrawn.”

Revolut

Headquarters: London, U.K.
Verdict: No overdraft fees

What they say: “Revolut will notify you following a negative balance, and allow you up to 7 business days to add money. After that, Revolut will attempt to correct the balance automatically by exchanging funds between accounts or adding money from your registered card, in accordance with Revolut’s Terms & Conditions.”

Any special terms or conditions? “If your Revolut account has insufficient funds, the debit will be returned by Revolut. Revolut doesn’t support overdraft for Direct Debits. To pay the bills, your balance amount should support the debit. The merchant has up to three attempts within 180 days to debit your account.”

Santander Bank N.A.

Headquarters: Boston
Total assets: $89.5 billion
Verdict: $35 fee after account is overdrawn by more than $100

What they say: “We’ve increased your overdraft threshold from $5 to $100, which means if a transaction causes your account’s balance to be overdrawn by $100 or less, we will not charge an overdraft fee for that transaction. We call it the Santander Safety Net. You’ll call it a welcome change.”

Any special terms or conditions? “If a transaction causes your account’s balance to be overdrawn by one hundred dollars ($100) or less, we will not assess any Insufficient or Unavailable Funds – Item Paid fees for that item.”

TD Bank N.A.

Total assets: $423.6 billion
Headquarters: Cherry Hill, N.J.

Verdict: $35 fee after account is overdrawn by more than $50

What they say: “An overdraft occurs when your available balance is not sufficient to cover a transaction. There is a $35 fee per overdraft up to three overdraft fees per day per account.”

Any special terms or conditions? “Overdraft services do not apply to TD Essential Banking Accounts. We may decline or return transactions that would result in an overdraft. Transactions that you make may cause your Account to overdraw but we will not assess your TD Essential Banking Account an overdraft fee or return item fee. For example, preauthorized transactions and other transactions may post to your Account even when the balance in your Account is not sufficient to pay the transaction.”

Truist Bank

Headquarters: Charlotte
Total assets: $509.2 billion

Verdict: $36 fee after account is overdrawn more than $5

What they say: “For transactions under $5, Truist will waive overdraft and returned item fees.”

Any special terms or conditions? “If your account has both Overdraft Protection and Overdraft Coverage, Truist will use Overdraft Protection first. If your account has neither, everyday debit card and ATM transactions that exceed the account balance will be declined.”

U.S. Bank

Headquarters: Minneapolis
Total assets: $573.3 billion
Verdict: $36 fee after account is overdrawn by more than $50

What they say: “We’ll authorize and pay overdrafts for the above transactions at our discretion. That means we do not guarantee that we’ll always authorize and pay any type of transaction. If we don’t authorize and/or pay a transaction that would cause an overdraft, your transaction will be declined or returned.”

Any special terms or conditions? “U.S. Bank will charge $36 for each overdraft item we pay or return on your behalf. We charge that fee only when the overdraft item we pay or return on your behalf is $5.01 or more. If your available balance at the end of the business day is overdrawn by $5.00 or less, a fee will not be charged.”

Wells Fargo

Headquarters: Charlotte
Total assets: $1.79 trillion
Verdict: $35 fee after account is overdrawn by more than 24 hours

What they say: “Our overdraft fee for Business and Consumer checking accounts is $35 per item (whether the overdraft is by check, ATM withdrawal, debit card transaction, or other electronic means); our fee for returning items for non-sufficient funds is $35 per item. We charge no more than three overdraft and/or non-sufficient funds (NSF) fees per business day for consumer accounts and eight per business day for business accounts.”

Any special terms or conditions? “The payment of transactions into overdraft is discretionary and we reserve the right not to pay. For example, we typically do not pay overdrafts if your account is overdrawn or you have had excessive overdrafts. You must promptly bring your account to a positive balance.”

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