Ranked: 6 Banks That Are Ready for the End of Overdraft Fees

The Biden administration is trying to end overdraft fees. New rules from the Consumer Financial Protection Bureau (CFPB) could be coming soon that would make it much harder for big banks to charge traditional-style overdraft fees when people overdraw their checking accounts.

Instead of $35 fees per overdraft, the future of banking is more likely to focus on checking account options that offer no overdraft fees, low overdraft fees, or creative account features to help customers. This could include overdraft forgiveness, or small personal lines of credit to help people bounce back from bounced checks.

Several banks and credit unions have already stopped charging overdraft fees. If you want a checking account with no overdraft fees, here are a few forward-thinking banks that offer creative overdraft solutions.

1. Alliant Credit Union

The first "bank" on this list is actually a credit union. Many credit unions do not charge overdraft fees, and Alliant Credit Union is a prominent online credit union that offers membership to people nationwide. Along with no overdraft fees, Alliant Credit Union checking accounts charge no monthly maintenance fees and require no minimum balances.

Alliant Credit Union lets members opt in to free overdraft protection, which automatically transfers money from your linked Alliant savings account. There is no fee for this service. Another more creative option, if you qualify, is to sign up for Alliant Credit Union Courtesy Pay service. With Courtesy Pay, the credit union will cover certain overdraft transactions on qualifying members' checking accounts, up to a 30-day limit.

2. Ally Bank

Ally Bank is an online bank that's known for high-yielding APYs on savings accounts and CDs, and it also offers a checking account with no overdraft fees. The Ally Spending Account is an innovative checking account. Not only does it provide free overdraft transfers if you have a linked Ally Bank savings account, it also offers a special fee-free CoverDraft℠ service that will cover you for up to $250 of overdraft transactions.

3. Capital One

Capital One has been in the news a lot lately, with its recent announcement about buying Discover®. But while the story of Capital One buying Discover has focused more on the possible implications for credit cards, Capital One also offers full-service banking with checking accounts that charge no overdraft fees.

There are a few options to help Capital One customers who experience an overdraft. If you have a connected Capital One savings account or money market account, Capital One will transfer money from your savings to your overdrawn checking account, with no fee.

Qualifying customers who make minimum regular deposits into their checking accounts can also choose the No-Fee Overdraft service. With No-Fee Overdraft, Capital One will cover you in case of certain overdraft transactions. But you have to repay the money as soon as possible, or your account might be in danger of being closed.

Unlike the online-only banks and credit union on this list, Capital One has a network of bank branches. Sometimes when you have an overdraft, you might feel more comfortable calling a local branch or talking to someone in person -- and Capital One gives you that choice.

4. Citibank

Eliminating overdraft fees isn't just for online banks and credit unions; one of the major national banks is getting in on the trend. Citibank charges no fees for overdrafts, returned items, or overdraft transfers. Some Citi checking accounts also offer special overdraft services:

• Checking Plus®: This is a variable-rate personal line of credit that helps Citi checking customers cover their overdrafts and get quick access to cash. Instead of paying overdraft fees, you can get a flexible, small-dollar loan when you need it most.
• Safety Check: This account feature lets Citi customers sign up to have the bank automatically move money from a Citi savings account to checking in case of overdrafts.

5. Discover® Bank

Discover is not just a credit card company, it's an online bank with a wide range of products, including a unique checking account that pays rewards. The Discover® Cashback Debit account is Discover's online checking option. It charges no overdraft fees and pays 1% cash back rewards on up to $3,000 of purchases per month.

Discover offers a free Overdraft Protection service that lets you sign up to link your Discover® Cashback Debit account with another Discover account. In case you overdraw your checking account, Discover will automatically move money from your linked account to cover the difference, with no fee.

6. Truist Bank

Truist Bank is a regional bank headquartered in Charlotte, North Carolina, with branches in 17 states. Truist Bank is not as big as Citi or in the news as often as Capital One and Discover have been lately, but it deserves recognition for its special checking account features.

Truist Bank offers two checking accounts that charge no overdraft fees -- the Truist Confidence Account (an entry-level debit account that actually has no paper checks), and the Truist One Checking account.

The Truist One Checking account is particularly unique. It offers a $100 Negative Balance Buffer for customers who qualify. With this overdraft feature, you're allowed to overdraw your checking account by up to $100, and Truist Bank will cover it for you. But to qualify for this overdraft buffer, you must have made direct deposits of at least $100 into your checking account during the past two months.

Bottom line

No one knows yet what the CFPB's new rules for overdraft fees will be, but many forward-thinking banks are already taking action to protect customers from overdrafts. If you want a no-fee checking account experience, consider these banks that offer special features, benefits, and buffers to help you keep more of your money.