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Learn about overdraft fees and how to avoid it

Your bank can't charge you a fee for overdraft purchases unless you consented.

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Fact checked

Finder’s pick for no overdraft fees: Aspiration Spend & Save Account

Aspiration Spend & Save Account logo

1%

APY

  • $10 minimum deposit to open
  • Unlimited cash back rewards
  • No monthly fee unless you choose to pay
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You can choose to have your bank cover the balances of any purchases you can’t afford — but it’ll come with hefty fees. Find out about overdraft fees and tips you can use to avoid them.

What is an overdraft?

An overdraft fee is charged by the bank when you withdraw too much money and your account balance dips below zero. It’s essentially a short-term loan from the bank to cover the cost of the purchase.

For example, if you had $5 in your account and you spend $20 on a debit card purchase, your account would be overdrawn by $15.

Types of overdraft fees

All overdraft fees are not created equal. Here’s how to sort them out:

Fee typeAverage costWhat it’s for
Overdraft$34/itemWhen your bank covers the difference for insufficient funds.
Non-sufficient funds$35/itemWhen your bank declines a transaction or rejects a check due to insufficient funds.
Overdraft protection$10/day – though some banks won’t charge for this.When your bank automatically transfers funds from a linked account to cover a transaction you’ve charged.
Extended overdraft$25/weekWhen you leave a negative balance in your account for 5 to 7 days in a row, your bank may charge this on top of the fees you already owe.

Tips for avoiding overdrafts

To keep your finances healthy, here are four ways you can avoid an overdraft fee:

  • Check your balance. Overdraft fees can add up quickly, so stay up-to-date with your finances by checking your balance, setting up push notifications on your banking app when your balance falls below a certain threshold or using an app like Cleo to keep an eye on your balance.
  • Use ATMs with caution. Certain machines will let you withdraw money you don’t have, leading to hefty overdraft fees.
  • Be aware of pending balances. Account balances displayed on ATMs and online may not always be correct. Recent purchases can take time to show up, so factor in any recent pending purchases when deciding what you can spend.
  • Take stock of your spending habits. If you’ve had to deal with several overdrafts, it might be time to sit down and write up a new budget — and practice sticking to it.

Can my bank always charge an overdraft fee?

Your bank can’t legally charge you a fee for point-of-sale purchase or ATM withdrawal overdrafts unless you opted in to overdraft coverage, but they can charge you for checks and automatic bill payments either way.

Compare overdraft fees from banks

Use the table to compare overdraft fees and other common charges from major banks. If more than one account catches your eye, click the “Compare” box next to each one for a unique side-by-side comparison.

Name Product Fee ATM transaction fee Overdraft fee Nonsufficient funds fee Foreign transaction fee
Aspiration Spend & Save Account
$0
$0
$0
$0
1%
A spend and save combo account with no monthly service fees, free access to every ATM in the world, unlimited cash back rewards and deposits insured by the FDIC. The Aspiration Spend & Save Account is a cash management account offering of Aspiration Financial, LLC, an SEC-registered broker-dealer. Aspiration is not a chartered bank.
BBVA Online Checking
$0
$0
$38
$38
3%
A full-service account with convenient, surcharge-free access to two massive ATM networks, plus a $200 signup bonus when you meet deposit requirements
Axos Bank Rewards Checking
$0
$0
$0
$0
1%
Earn up to 1.25% APY while enjoying a suite of digital tools for smarter money management.
Axos Bank Essential Checking
$0
$0
$0
$0
No fees. Unlimited domestic ATM fee reimbursements.
TD Beyond Checking
$25/month
(can be waived)
$0
$35
$35
0%
A checking account that offers interest plus three ways to waive the monthly fee, two overdraft paybacks a year and no ATM fees with a $2,500 balance.
HSBC Advance Checking
$25/month
(can be waived)
$0
$35
$35
3%
Get up to $270 (max. $50 per month) for eligible new customers who open an HSBC Advance checking account. Conditions apply. Deposit products are offered in the US by HSBC Bank USA, N.A. Member FDIC.
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Compare up to 4 providers

Bottom line

Keeping track of your finances and setting up overdraft protection with your bank can help protect you from hefty fees. But if your budget is tight and you’ll likely need overdraft at some point, compare checking accounts and use a bank that offers low fees.

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