April 4, 2022
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Money Hacks

Overdraft fees - who’s charging what and how to avoid them

Psst... there's one bank that won't charge a dime 👀

Bank fees may very well be the bane of your existence, but that could soon change.

With many Americans still paying off fees from Covid-19, it’s no wonder we've had enough of the big banks taking big bucks. You may not even realize what your bank charges you and how much that could affect your financial health, which is why I’m here to hold up the mirror and show you what you can do about it.

Below is a table of the latest fees from some of the top 10 consumer banks in ‘merica that are charging your pockets.

Checked on April 4th 2022

Bank Overdraft fee Maximum fee limit Maximum fee charge per day More info plz
Capital One $0 No overdraft fees (includes checking accounts) $0 Have scrapped overdraft and NSF fees
Chase (JP Morgan) $34 per item Max 3 fees per day (no charge for items less than $5) $102 First charge for item that overdraws account by more than $50
Wells Fargo $35 per item Max 3 fees per day (no charge for items less than $5) $105 Eliminated NSF and transfer fees for ‘certain’ customers and plans for 24 hour grace period to cover overdraft arrears
TD Bank $35 per item Max 3 fees per day (no charge for items less than $10) $105 Must be overdrawn by more than $5 to incur fee
Citi $34 per item (for now) Max 4 fees per day $136 Must be overdrawn by more than $5 to incur fee
U.S Bancorp $36 per item Max 4 fees per day (No charge for items less than $5) $136 Will eliminate overdraft, NFS and protection fees in summer 2022
Bank of America $35 per item Max 4 fees per day $140 Will reduce to $10 starting in May 2022
PNC Financial Services $36 per item Max 4 fees per day. Only max 1 per day for ‘Virtual Wallet’ customers $144 Gives 24 hour grace period to sort negative balance
Huntington $36 per item Max 4 fees per day $144 Will reduce fee to $15 beginning July 2022
Truist Financial Corporation $36 per item Max 6 fees per day $216 $36 fee for negative balance after 7 consecutive days
Per item means per transaction, so each time you tap your card to get Taco Bell,
expect a ‘$34 thanks hun’ tip on top from your bank

As you can see, 9 out of 10 banks currently charge $34 or more every time you go into your overdraft.

What the actual freaky fees.

Let’s give an example of the wave of chaos this can bring to your life:

‍✨✨✨✨✨✨*~Insert hypothetical dream state~* ✨✨✨✨✨✨

You have $20 in your Chase account and you get a $70 charge from Telefonica
Making you -$50 into your overdraft

Bank charge #1: $35

You’re now -$85 into your OVERDRAFT

You meet a pal at Target and go get a Starbucks, which you of course treat her to: $12.21

Bank charge #2: $35 (Total fees $70)

You’re now -$132.21 into your OVERDRAFT

You get an Uber back because today was leg day at the gym, no excuse really but: $14.89

Bank charge #3: $35 (Total fees $105)

So, in just one day, you’re now -$182.10 into your mother-freaking overdraft.

✨👋✨👋✨👋✨*~Aaaaaannnnnddd you're back to reality~*✨👋✨👋✨👋✨

Take a seat and catch your breath boo… 🪑

But don’t worry, there’s good news on the other side of this shizz-show of a rainbow.

As stated, there is one bank that is not charging a single overdraft dime and that bank is

🥁*drum roll*🥁…

Capital One

woman clapping
☝️Yasssss Capital One!☝️

Congrats for not being such a coin-thirst trap Capital 👏

Citigroup is next to follow, with claims it’ll slash its overdraft fees by Summer 2022, becoming the biggest lender in America to abolish these controversial charges. Bank of America will reduce its $35 fee to just $10 in May and Huntington bank from $36 to $15 in July.

But why this sudden change of heart? Well it’s those small neobanks that are offering better options you have to thank for.

All this is great news, but what should that mean to you?

Is it time to break up with your bank?

Only you know the answer to that. It may very well be worth your while to change over to a bank like Capital One if you find you’re constantly making transactions whilst in your overdraft. But, sometimes things don’t look as simple as it seems. Your current bank may be offering better incentives to stay, or you're tied into a joint account with a partner who struggles to keep on top of finances, which has made everything a bit well… complicated.

If you are considering, here are things to look out for when scoping for a new bank:

  • Interest earned on overdraft (a.k.a APR)
  • Fees obtained on overdraft e.g overdraft, non sufficient funds (NSF), transfer etc
  • Overdraft limit per month
  • Total limit of your overdraft

Can I switch banks if I’m already in my overdraft?

It’s best to get your overdraft sorted before you switch banks, but yes it is possible. As long as you have a clean credit history and have yet to go over your overdraft limit you can still apply. 

How can I avoid overdraft fees?

There are a few ways you can do this:

🔗 Link your savings to your checking account

If you have a savings account, you may want to switch it over to the same bank as your checking account. The reason for this is most banks will allow you to link the two, so if you happen to go into your overdraft, your savings can bail you out  🙌

But, be warned. Some banks will charge an ‘overdraft transfer’ fee for doing this. Often it will be cheaper than an overdraft fee (around $10), so technically you are saving more.

⚠️ Sign up for low balance alerts

With most banks, you can set up a reminder so you’re notified when your bank balance reaches a certain amount. Often it can be done through the app or online banking settings.

🎱 Organize your transfers and bill due dates

Make sure your transfers are made in due course before your bill is due to come out. Another alternative is to never opt-in to these fees in the first place, although be careful, as you may find you get a charge or penalty fee from the provider that is larger than the overdraft fee itself (not to mention how it could affect your credit score).

🙌 Get a Salary Advance

Considering the average overdraft fee is $35 PER transaction, you’d be better off avoiding that charge with the help of a Salary Advance. And of course, this is something Cleo can certainly help with 👀

Our Salary Advance is an interest free advance that can be used to avoid dipping into your overdraft and obtaining insufferable fees.

If eligible, Cleo can spot you up to $100, and no, it won’t affect your credit score (phew!) In fact, we don’t even credit check 💃

This feature is part of the Cleo Plus subscription which is available for $5.99 a month, something to consider to fight those overdraft fees.

You can sign up to Cleo Plus by downloading our app here.

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