Friday, September 30, 2022

Are There Any Banks With No Overdraft Fees

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Scotiabank Preferred Package Account

Ally Bank axes overdraft fees should they exist at all?

Scotiabank is one of the top five universal banks in all their core markets. They are a trusted and reliable banking option for many Canadians.

As you can probably imagine, Scotiabank offers a variety of different chequing accounts. They all come with a monthly fee, including the Preferred Package Account, which has made our list of best no-fee chequing accounts.

The Preferred Package Account is a new and improved version of the Momentum Chequing Account. Accounts can be opened in any Scotiabank branch, over the phone, online or via the mobile app. Your account will also be available via Apple Pay, Samsung Pay or Google Pay. This offers hassle-free payments across Canada.

When you maintain a minimum balance of $4,000 in your account, the monthly fee is waived, and it becomes a no-fee account. If you do not maintain this balance, your monthly fee will be $16.95.

Scotiabank is our favourite of the top five banks in Canada. They tend to offer the best combination of benefits, price, and accessibility. The Preferred Package Account is no different. If you are in a position to maintain $4,000 in your chequing account, this chequing account has to be a consideration.

Lets take a look at some of the pros and cons of the Preferred Package Account.

Pros

Cons

Summary

Banks Slowly Offer Alternatives To Overdraft Fees A Bane Of Struggling Spenders

Aggressive overdraft fees are worth tens of billions of dollars a year to the banking industry. Account holders are finally getting some better options.

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By Tara Siegel Bernard

In less than a week, Keri Fitzpatrick, a self-described lunch lady, was dinged for $175 she definitely didnt have.

A succession of automated payments over two days for her phone, two credit cards and car insurance pushed her TD Bank account into the red, socking her with $140 in overdraft fees. Then another unexplained fee surfaced on Friday, even though her paycheck had landed and she couldnt find any other pending charges.

Ms. Fitzpatrick, 29, said she shouldve been paying closer attention she assumed she had more money in her account. But she still couldnt believe how quickly the charges piled up.

Its not like one fee comes out for one day. It is $35 for each of those, said Ms. Fitzpatrick, of Peterborough, N.H., who oversees a middle school cafeteria. It is just outrageous.

Overdraft fees, initially marketed as a convenience, have proliferated in the past quarter-century. Rather than bouncing a check or other payment, these programs reassure customers that a bill wont go unpaid or an emergency purchase wont be denied even though they can turn a $3 coffee into a $38 extravagance.

Set Up Overdraft Protection

Once you’ve decided which accounts you want your overdraft protection transfers to come from, you’re ready to set up overdraft protection. To do this, simply do one of the following:

  • Log in to online banking, then go to your checking account and select the Overdraft protection options link.
  • Talk to a banker at a U.S. Bank branch.

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Best Range Of Online Features: Ally Interest Checking Account

If youre like most people, youre probably not thrilled about accidentally getting hit with a $35 overdraft fee for a small purchase that pushed your balance over the ledge. If kicking late fees to the curb for good sounds appealing to you, check out the Ally Interest Checking Account.

Ally is another online option, so it may not be for you if youd rather go to a physical branch. If you like the streamlined processes online banks provide, however, its worth looking into due to its perks. These include:

  • No overdraft fees
  • Debit card controls
  • Free incoming wire transfers and cashiers checks
  • Access to over 43,000 free ATMs and up to a $10-per-statement-cycle reimbursement for out-of-network ATM fees

Ally also offers a number of free investing account options, from retirement accounts to stock portfolios. If youre into investing or are even curious about it, Ally can be a convenient option for accessing multiple financial accounts in one place.

Tips To Avoid Overdrafting Your Account

Bank Account with No Overdraft Fees

Though the banks discussed above offer some solutions, there are things you can do to lessen the likelihood of overdrawing from your account.

First off, there are three things that suck up most peoples paychecks every two weeks.

  • Student Debt
  • Car Payments

Is this the situation youre in?

Experts say you should never spend more than 28% of your income on housing, nor should you spend any more than 10% to 20% on transportation.

Simply put, dont live beyond your means. Do the math before you commit. If the monthly payments mean you wont be able to afford a fast-food run once in a while, then you cant afford them.

Yes, there are things you can do to lessen your student debt before you matriculate, but its unlikely youre in a position to take advantage of those things now. So, apart from consolidating your loans and getting into an income-based repayment plan, lets focus on some practical things you can do to stay on top of your bank account.

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Common Characteristics Of Canadian No

First, lets go through what most of these no-fee bank accounts have in common.

Most of the no-fee banks in Canada are digital, giving you the convenience of banking from wherever you are. Fewer physical branches, in most cases, mean lower operating costs for banks which can save you money on the services you receive.

But fear not, that doesnt mean that you wont have access to cash or assistance from a real person. In most cases, you still have access to a wide range of ATMs to make deposits and withdrawals and can call their call centers to get assistance if you ever need it.

If you are wondering about safety and insurance, digital banks are members of CDIC, the Canada Deposit Insurance Corporation, just like other big banks out there.

This means that up to $100,000 of your deposits are protected. In the case of , you may even have unlimited insurance on your deposits, which I will touch on at the end.

Lastly, note that I wont mention student, youth, or senior accounts in this post, which tend to be free of any fees even at the Big Five. We will only go through CAD accounts for your day-to-day banking that could potentially replace your current bank that is charging you fees.

Free Credit Union Chequing Accounts

There are also credit unions of varying sizes across the country that offer no-fee banking. Your deposits in credit unions are protected by provincial deposit insurance rather than the Canada Deposit Insurance Corporation, which in some instances provides more insurance.

This can mean that more than $100,000 of your deposits are insured, so you can feel comfortable about keeping all of your money in one place.

In the case of B.C., the provides unlimited deposit insurance protection on all deposits in British Columbias credit unions.

Another benefit of credit union accounts is that you have access to in-person branches with most of them. This does sometimes mean that operating costs of branches limit the number of free features of bank accounts, but it all boils down to personal preferences about your banking.

If you are interested in looking into credit unions for fee-free chequing accounts, I recommend looking into Valley First and Vancity credit unions in BC, Cambrian and Steinbach credit unions in Manitoba, and Innovation credit union in Saskatchewan.

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Best For Cash Back: Discover Cashback Checking Account

Discovers Cashback Checking Account has a somewhat unusual but very appealing perk. Much like a rewards credit card, you can earn 1% cash back on up to $3,000 each month for purchases you make with your debit card. To break it down, that means you can earn up to $30 in cash back each month or $360 in cash back each year just for making regular purchases. Additionally, youll enjoy:

  • No overdraft fees
  • 60,000 free ATMs nationwide
  • Free online bill pay

Discover is among the only debit cards currently offering a cashback option. That, plus its generous array of fee-less perks, makes it a top contender among the best fee-free checking accounts out there.

Top Checking Accounts With No Overdraft Fees In 2022

Chime Bank Review | FREE Online Bank Account No Overdraft Fees | Early Direct Deposit

Editorial Note: The content of this article is based on the authors opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

Watching your checking account balance dwindle to $0 isnt a great feelingand getting slapped with a fee because youve overdrawn your account is even worse. While you might think an overdraft fee is just par for the course when it comes to checking, there are plenty of accounts that dont allow you to overdraft or provide a straightforward, fee-free method of overdraft protection. You just need to know where to look.

Thats why weve identified the best checking accounts for avoiding overdraft fees. If youre constantly finding yourself paying a fee for falling into the red, one of these banks might be a good fit for you.

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What Banks Earn In Overdraft Fees

Though many banks have eliminated or reduced overdraft fees since 2019, in that year banks collectively charged $15.5 billion in overdraft and NSF fees, according to the CFPB. More recently, various big banks received hundreds of millions of dollars in revenue from such fees during a nine-month period in 2021.

The CFPB would consider a range of regulatory interventions rather than allowing large institutions to rely on junk fees forever, the agency said in a December 2021 statement. The CFPB describes junk fees as those that are excessive, and examples include overdraft fees, return fees, late penalties and out-of-network ATM fees.

Mergers have decreased competition among banks, giving them less incentive to lower their fees, according to Elyse Hicks, consumer policy analyst at Americans for Financial Reform, a nonprofit advocacy organization. I can say with certainty, unless supervision and enforcement from the CFPB coupled with legislation to not only end overdraft fees, but create a level playing field for those living on the margins exist, banks will only rebrand overdraft fees as other junk fees and the cycle will begin again, Hicks said in an email.

Criticism Of Nsf Fees

Complaints about NSF fees are nothing new, as the 2010 bank reform legislation suggests. There have been numerous lawsuits over the years the 2010s, in particular, have seen an increase in class action lawsuits challenging the manner in which financial institutions charge overdraft and non-sufficient funds fees.

These lawsuits don’t try to deem NSFs illegal rather, they allege breach of contract and unjust enrichment in the way they’re applied. Different specific practices that have been cited include:

Reordering transactions:Financial institutions processing debits to consumer accounts in a way to maximize overdraft feesdeducting the largest first, rather than in chronological order. This strategy triggers negative balances and more frequent overdraft fees. In 2011, Bank of America settled a two-year-old class action for $410 million for reordering customer transactions and charging overdraft fees in this way. TD Bank paid over $62 million in a class action settlement for the same thing in 2010.

Financial institutions authorizing transactions at a time when customers had sufficient funds in their accounts to cover them, or promising to set aside fundsand then charging fees because the accounts had insufficient funds later, at the actual time of posting and settlement. In 2020, the Bank of Hawaii set up a settlement fund of $8 million to repay clients who had been charged in this way from 2010 to 2017 it also agreed to forgive overdraft fees that remained unpaid.

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Choosing The Right Account

While the availability of no-overdraft-fee accounts is growing, finding the one that fits your goals can get complicated. These guidelines can help.

1. Ask Directly About Bank On AccountsAs noted earlier, many major banks and credit unions offer Bank On accounts. All told, these accounts are available at 47 percent of bank branches nationwide, according to David Rothstein, senior principal at CFE Fund, a nonprofit that leads the Bank On initiative and certifies these accounts.

Still, these accounts might not be prominently displayed online, or consumers may be steered toward other types of accounts, says Peter Smith, senior researcher at the Center for Responsible Lending.

Your best strategy is to call or speak to a bank representative, and ask whether they offer a Bank On account at your branchit may carry a different brand name. If none is available, ask whether the bank offers accounts that dont charge overdraft fees and how to qualify.

2. Ask About Other FeesYoull need to look beyond overdraft fees to get a complete picture of all the charges you might encounter, from ATM charges to not-sufficient fund fees to monthly service charges. The full fee disclosure may be in PDF form, Smith says. Grab a coffee and click through to avoid surprises.

Penelope Wang

Make Deposits Before Withdrawals

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Before you make an account withdrawal, make your deposits first. If youre waiting for your employer to deposit your paycheck, dont make a purchase until it shows deposited in your account.

Banks charge overdraft fees in real-time, not at the end of the day. Waiting a few minutes can literally mean the difference between paying an overdraft fee or not.

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What Overdraft Settings Apply To My Clear Access Banking Account

Our standard overdraft coverage does not apply to Clear Access Banking accounts, and you cannot request that it be added to your account. With Clear Access Banking, if you do not have available funds in your account at the time of a transaction, we will:

  • Return certain payments unpaid.
  • Not authorize ATM and everyday debit card transactions into overdraft.
  • Not authorize other transactions into overdraft.

We will not assess non-sufficient funds/NSF fees if we return or decline to authorize an item. However, payees or merchants may still assess a fee. Other optional overdraft services, such as Overdraft Protection and Debit Card Overdraft Service, are also not available on this account. References in your Deposit Account Agreement and Consumer Fee and Information Schedule to standard overdraft coverage, Overdraft Protection, and Debit Card Overdraft Service, including associated overdraft and non-sufficient funds/NSF fees, are not applicable to Clear Access Banking accounts.

Sign-up may be required. Availability may be affected by your mobile carrier’s coverage area. Your mobile carrier’s message and data rates may apply.

The full balance of check deposits may not be immediately available if a hold is placed. Deposits are subject to the banks funds availability policy.

Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.

LRC-0121

How To Choose A Bank Account Without Overdraft Fees

More banks are trimming or dropping charges for overspending your account. CR has tips on finding the right plan.

    For years, banks have enjoyed big revenues from charging overdraft fees. Almost 1 in 10 bank customers, often low-income consumers, routinely spends more than they have in their checking account, incurring fees averaging $34 each time.

    But banks are confronting growing pressure from regulators, including the Consumer Financial Protection Bureau, which has announced that it will scrutinize banks reliance on overdraft fees. Banks also face competition from online rivals that dont levy those charges.

    Now a growing number of banks , most recently Citi, have announced that they are eliminating overdraft fees, while others are starting to offer low-cost accounts.

    Still, if you tend to overdraw your account, choosing the right option isnt always easy. And depending on the type of account, eliminating overdraft fees might mean a bounced check and yet another fee. Heres a guide to whats available and what might work best for you.

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    Are Nsf Fees Legal

    Yes, NSF fees are legalon bounced checks, at least. Generally, they can’t be charged on debit card transactions or ATM withdrawals.

    Overall, the U.S. government doesn’t regulate NSF fees or the size of fees that’s left up to the individual financial institution. The Truth in Lending Act does require banks to disclose their fees to customers when they open an account.

    Balance Your Checkbook Regularly

    Capital One Bank – No Overdraft :30 | Capital One

    Maybe you dont write checks on a regular basis, but you have a ledger.

    Write your check and debit transactions in the same ledger. Once a week, compare the written transactions to the processed transactions.

    There might be a discrepancy between your ledger and the current available balance if somebody hasnt cashed their check yet. Because you know you still have cash hanging out thats technically been spent already, you know theres not as much money in your account as your bank thinks.

    In most cases, you have probably overdrafted your account by $20 or less. If you had balanced your checkbook on a regular basis, would you still have paid an overdraft fee?

    When balancing your checkbook ledger, here are a few transactions to include in your account:

    • Handwritten checks
    • Automated bill payments
    • Direct deposits from your employer

    Your bank might automatically withdraw any payments you make in their Bill Pay program, even if the company hasnt deposited the check yet. If so, this makes your task of balancing the ledger a lot easier.

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