Looking for a decent bank with no overdraft fees

September 13, 2022 7:37 AM

I've done my banking with a credit union for decades. My one complaint about ours is excessive overdraft fees; in fact, a couple of years ago we got a tiny, tiny payout on a class action against our CU for this very issue. I'm tired of it. Do you have a no-overdraft bank that you're happy with? Please advise.

I haven't used a commercial bank like Capital One since the 80s, or an all-online option in our modern era.

I know that one solution to overdraft fees is to be more careful to monitor your balance, but my spouse and I have felt for a long time that there is sometimes suspicious timing in terms of when something clears versus the balance in our account. The class-action payout a few years ago seemed to support our perception, but nothing has changed that we can see.

Please point me toward a new back, one that you've been happy with. I don't have complex needs, I just need this for checking and savings.

posted by Well I never to Work & Money (9 answers total)

(Apologies if this isn’t available, but at a lot of banks and CU’s there’s essentially a tiny box you check (or not) that basically don’t allow you to overdraft, the transaction just declines. Is that acceptable for you or no?)
posted by raccoon409 at 7:43 AM on September 13, 2022

My bank (capitol one360) uses my savings account as backup when I overdraw checking. They actually give me till end of day to transfer so it doesn’t use it.
posted by sandmanwv at 7:49 AM on September 13, 2022

I also use CapitalOne 360 and there are no overdraft fees. I use the same functionality sandmanwv does where it automatically transfers from my savings account as a backup when I overdraw, but even if you don't do that they don't charge overdraft fees (although they expect you to top up the account ASAP and they say they will close your account if you run too much of an overdraft for too long).

I have heard other people complain about CapitalOne but it's worked great for me for like 15 years.
posted by mskyle at 8:04 AM on September 13, 2022

If you're looking for a bigger bank, here's a list. I believe KeyBank is getting rid of them in the nearish future as well. Huntington also has a grace period of some sort, or used to. It's the way of the future!
posted by chesty_a_arthur at 8:09 AM on September 13, 2022

Response by poster: Somehow, we are able to opt out of overdraft fees for debit card transactions and checks (not that we write those anymore). But not for ACH transfers, which are the only payment option certain things we deal with accept. I suppose I could and should call the CU to clarify this.
posted by Well I never at 8:40 AM on September 13, 2022

Your CU or bank should offer some form of overdraft protection. or, yes, call htem, tell them you find their overdraft system skeevy and are considering a new bank. Ask what they can do for you. Don't do business with a bank that won't help you resolve problems.
posted by theora55 at 8:44 AM on September 13, 2022 [1 favorite]

Before you go through the hassle of changing banks, seeing if your CU provides automatic overdraft protection using savings or linked credit makes sense. My CU is set up to draw from my savings and then CU credit card if my checking overdraws. No fees or penalties.
posted by quince at 9:59 AM on September 13, 2022

You can investigate whether a local bank outlet/ local credit union is willing to extend to you a line of credit?

At my credit union, the LoC was very easy to get, and instead of overdraft fees, it would draw the overdraft from the LoC and you only pay the interest accrued on it. As soon as you put money in your account, it applies to the LoC first and the interest accrual immediately ceases.
posted by porpoise at 11:52 AM on September 13, 2022

Banks that charge overdraft fees are required to let you opt out of overdrafting for everyday charges, but they’re not required to do the same for ACH withdrawals.

I agree with the people above that recommended Capital One 360. As far as I know they no longer offer an overdraft line of credit (which I think is a holdover from when the 360 bank was part of ING) but they definitely don’t have any overdraft fees in general. Their FAQ specifically calls out “electronic payments” (aka ACH) as included in this. Just keep in mind this is likely to make them more inclined to decline a transaction than approve it.
posted by tubedogg at 3:10 PM on September 13, 2022