Here are the banks taking the sting out of overdraft fees

Banks are cutting out the pain of overdraft fees — either by reducing the amount, limiting when they apply, or slashing them altogether.

Last month, Citigroup became the largest U.S. bank to cut overdraft fees for its customers, following Capital One in December. In January, Bank of America said it’s cutting its fees from $35 to $11 starting in May. The moves from these big banks come after a slew of smaller, regional banks last year announced efforts to reduce the impact of overdraft fees on their customers.

These fees, charged when a bank customer spends more than what’s in their bank account, disproportionately hurt financially vulnerable households and young account holders and have come under recent scrutiny from the Consumer Financial Protection Bureau.

“[This] is the latest, and most significant, move by the banking industry in an area that has been under intense scrutiny by regulators and lawmakers alike,” Bankrate’s chief financial analyst, Greg McBride, said in an email after Bank of America’s announcement. “This will ratchet the pressure up on other large national and regional banks to take similar steps.”

Online banks and banking apps like Dave, Chime, and Axos have advertised no overdraft fees as a way to lure new customers. Traditional banks, though, have been slower in the space. Here are the ones that have made moves to eliminate, reduce, or mitigate overdraft fees.

Ally

Ally is an online bank that offers no overdraft or maintenance fees for its interest checking account that earns account holders 0.10% APR. The bank eliminated overdraft fees in June 2021. Ally also offers an Overdraft Transfer Service where customers can transfer funds from their savings accounts if they overdraft their checking accounts. They can also use a CoverDraft service that customers can use 30 days after depositing $100 into their checking accounts. CoverDraft gives customers 14 days notice to transfer $100 to their accounts if they’re overdrawn.

Bank of America

While Bank of America didn’t completely eliminate overdraft fees, the bank greatly reduced fees. The bank will reduce overdraft fees from $35 to $10 starting in May. Customers won’t be charged if transactions are canceled if they don’t have sufficient funds in their accounts. The bank will also not charge customers overdraft ATM fees. Bank of America’s customers will no longer have to pay a $12 fee to move funds from one account to another to avoid overdrafts.

Capital One

Capital One was the first big bank to cut overdraft fees in December 2021. Account holders earn 0.10% APR. The bank’s 360 Checking Account eliminated overdraft charges and will continue to provide overdraft protection to customers if they enroll in the no-fee overdraft program. The bank can also decline purchases or transfer funds from customers’ savings accounts if they’re overdrawn.

Chase

While Chase hasn’t eliminated overdraft fees, the bank has reduced its overdraft fees on their accounts with a 0.01% APR. Customers aren’t charged overdraft fees if they’re overdrawn by $50 or less. Account holders can also use direct deposit two days early to cover their accounts with their paychecks. The bank is also giving customers a day to get their accounts to $50 or less overdrawn to avoid overdraft fees.

Fifth Third

Fifth Third Bank offers an overdraft-fee Express Checking account to customers. The Momentum Checking eliminates the fees to transfer funds between accounts when customers are overdrawn. The bank’s other checking accounts that have a $37 overdraft fee don’t charge the fee if customers are overdrawn by $5 or less. The bank also doesn’t charge its customers daily overdraft fees.

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Frost Bank

San-Antonio based Frost Bank won’t charge customers its $35 overdraft fee on accounts overdrawn up to $100. Frost Bank will also have a fee-free option for customers when they transfer funds between accounts to cover overdrafts.

Huntington Bancshares

Huntington Bancshares has measures similar to TD Bank to help customers avoid its overdraft and returned check fees. Huntington will slash its overdraft fee from $36 to $15 in July, charge customers a limit of four times a day for being overdrawn, and won’t charge fees until a customer’s overdrawn by more than $50.

M&T Bank

Buffalo-based M&T Bank announced in February that customer’s overdraft fee will drop from $36 to $15 during the second half of the year. The bank also offers a MyWay banking account that doesn’t charge overdraft fees.

PNC Bank

PNC Bank has a Low-Cash Mode program to warn customers 24 hours before their account is about to be overdrawn so they can avoid their $36 overdraft fee. The bank also eliminated its non-sufficient funds fees as well.

Regions Financial

The Alabama-based bank eliminated overdraft fees in September 2021 for its Regions Now Checking Account. That specific account won’t charge customers overdraft or non-sufficient funds fees. However, customers have to pay a flat monthly $5 fee for the overall account.

Synovus Bank

Synovus Bank CEO Kevin Blair announced that the Georgia-based bank will make changes to its $36 overdraft fee by the end of 2022. Synovus won’t charge customers if they’re overdrawn by $5 or less as part of a customer’s Overdraft Privilege protection.

TD Bank

TD Bank isn’t getting rid of its $35 overdraft fee, but is helping customers avoid the bank’s charges. The bank is cutting transfer fees for customers that use savings overdraft services. Account holders can overdraft up to $50 before incurring overdraft charges. TD Bank will also give customers 24-hours notice if they’re about to become overdrawn so they can add funds to their accounts.

Wells Fargo

Wells Fargo offers a Clear Access no-overdraft account for teen and student customers. While Wells Fargo isn't eliminating its $35 overdraft fee, for its Everyday Checking accounts, it is taking steps to help customers avoid overdraft fees. If customers transfer funds between accounts to cover a customer’s lack of funds, Wells Fargo won’t charge transfer fees starting this spring.

Ella Vincent is the personal finance reporter for Yahoo Money. Follow her on Twitter @bookgirlchicago.

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