Overdraft fees averaged $26.61 per transaction in 2026. If you overdraft a few times a month, you could be handing your bank hundreds of dollars a year. Here is how to stop paying them.
What Is an Overdraft Fee?
An overdraft fee is charged when you spend more than your account balance. The bank covers the transaction but charges you for the service. Some banks charge up to $35 per transaction. If multiple transactions overdraft in a single day, you can be hit with multiple fees.
1. Switch to a Bank That Does Not Charge Overdraft Fees
The simplest fix is choosing a bank that does not charge overdraft fees in the first place. Several banks now offer fee-free overdraft or simply decline transactions that would overdraw your account.
Banks with no overdraft fees include Ally Bank, Chime, and many credit unions. These accounts decline over-limit transactions rather than charging you for them.
2. Set Up Low Balance Alerts
Most banks let you set up text or email alerts when your balance falls below a threshold you choose. Set an alert at $100 or $200 — enough warning to transfer money before you overdraft.
This costs nothing and takes two minutes to set up in your bank’s app.
3. Link a Savings Account as Overdraft Protection
Many banks offer free overdraft protection if you link a savings account. When you spend more than your checking balance, the bank automatically transfers funds from savings to cover it. Some banks charge a small transfer fee ($5–$10), but it is far less than a full overdraft fee.
Check your bank’s app or call to enable this if you have not already.
4. Opt Out of Overdraft Coverage for Debit Card Purchases
Under federal law, banks must get your permission (opt-in) before charging overdraft fees for debit card and ATM transactions. If you never opted in, these transactions are automatically declined when your balance is too low — no fee charged.
If you opted in previously, you can opt out at any time by calling your bank or updating your account settings online.
Note: this does not apply to checks or ACH transactions, which can still overdraft even without opt-in.
5. Keep a Buffer in Your Checking Account
Treat your real minimum balance as $100 or $200 instead of $0. When your “mental zero” is higher than your actual zero, you have a cushion that prevents accidental overdrafts from small timing errors.
6. Use a Budgeting App
Apps like YNAB (You Need A Budget) or Monarch Money track your spending in real time and show you exactly how much is available before bills hit. When you can see your upcoming expenses mapped against your balance, you know ahead of time if something will be short.
7. Move Your Payday to Align With Your Bills
If your biggest bills land right before payday, you may regularly run low for a day or two. Many employers and gig platforms now offer flexible pay schedules or early direct deposit. Getting paid two days early through your bank (Chime, Ally, and others offer this) can eliminate the gap entirely.
8. Ask Your Bank to Waive the Fee
If you overdraft for the first time or overdraft rarely, call your bank and ask them to waive the fee. Banks do this regularly for customers in good standing. A polite 2-minute phone call can save you $30. If they say no, ask again — or switch to a bank that does not charge overdraft fees.
What About Overdraft Lines of Credit?
Some banks offer a formal overdraft line of credit — essentially a small loan attached to your checking account. You pay interest on what you borrow, but the rate is usually much lower than the cost of repeated flat fees. If your bank offers this, it is worth considering as a backup.
Bottom Line
Overdraft fees are optional expenses. By switching to a fee-free bank, setting up alerts, linking a savings account, and keeping a small buffer, you can eliminate them entirely. The steps take less than an hour and the savings add up fast.