Banks with the best overdraft protection are hard to find! Most of the banks charge outrageous fees when it comes to overdraft. Luckily for you, a few banks have fair and friendly overdraft protection services. In this article, you will find the best banks overdraft-wise. First, let’s start with the basics.
What are overdraft fees
Overdraft fees are fees that your bank charges you whenever you make a purchase and your checking account goes negative. When this happen, your bank has to cover you because you don’t have enough money in your account. Today, the average overdraft fee is $35 per transaction. Meaning that every transaction that will bring your account from positive to negative or any transaction you make when you are already negative will cost you $35 (+ the cost of the item you’re paying of course).
Now, let’s dig into it. These are the 3 banks that have the best overdraft protection:
Capital One 360
Product: Line of credit
Details: This bank allows you to sign up for the line of credit overdraft protection program. It means that instead of paying the fix fee that other banks would charge you, at Capital One 360, you will just pay interest on the amount you use. What is the interest rate? Depends on many factors – you should talk with a banker of Capital One 360 directly to find out.
Capital One 360 also allows you to have a regular overdraft protection – similar to the banks. They will charge you $35 per transaction and will give you a 1 day grace period – if you can manage to cover what you purchased, they will waive the fee.
Product: Friendlier overdraft protection
Details: Discover will allow you to connect a bank account/ savings account to your checking account. If you need money because you’re about to go negative, they will automatically transfer funds to your checking account with no charge! If you do end up overdrafting (because you have no money on your linked account), Discover will charge you $30 per day, rather than the usual $35 per item that the other banks charge.
Product: Line of credit
Details: Similar to Capital One’s offer, EverBank will charge you interest on the amount you used to overdraft. You can sign up for this program for free, and the interest you will pay depends on who you are, how much you make, etc… If you fail to pay the interest that you owe, you will be charged a $25 late payment fee.
EverBank will also allow you to opt-in for a regular overdraft protection program, at a $30 fee for each item.
What is the best bank for overdraft fees
If you would rather use a classic overdraft protection service instead of a line of credit as suggested above, you should first check the rates of overdraft fees by bank. You will find the cheapest overdraft fees at HSBC ($10), Navy Federal CU ($20) and First National Bank ($28). Don’t forget that each bank will charge you multiple times (except HSBC) for each time you use your debit card to overdraft.
Banks with automatic overdraft protection
There are no banks providing automatic overdraft protection because they are not allowed to! Few years back, the Consumer Financial Bureau Protection, the CFPB, made overdraft protection off by default. It means that customers have to actively opt-in for this service if they wish to use it. As you may imagine, the reason behind this is to protect you, the customers, of inadvertently paying outrageous bank fees.
Banks with no overdraft fees
If you’re looking to not hear about overdraft ever again – it is possible! Banks with no overdraft fees exist, online. At these banks, you will not be able to overdraft or get any types of cash advances whatsoever. It means that you might get stuck without that extra cash at the end of the month. Obviously, it will be better if you can do without, but sometimes you just need cash now, and overdraft can be considered a helpful protection.
Bank with highest overdraft limit
Finding the bank with the highest overdraft limit is a tricky question and there is no one answer but we did address the subject as much as we could in this article: how much can you overdraft your checking account.
The overdraft limit that you will be able to receive at your bank really depends on who are you as a customer. For example, the bank will want to know how much banking history do you have, your income, etc.. As a rule of thumbs, the average overdraft hole you can be in will be between $100-$1,000.