Does Ally Bank Have Overdraft Protection

Ally Bank Kills Hated Overdraft Fees A Huge Money

Ally Financial , having tested a banking model without overdraft fees, is making it permanent. The move applies to all types of accounts including checking and savings and there are no requirements or restrictions.

In April 2020, Ally began to waive overdraft fees, citing coronavirus pandemic hardships many customers faced. On June 2 Ally said its eliminating those fees for good.

Overdraft fees are a pain point for many consumers but are particularly onerous for some. It is time to end them, CEO Jeffrey Brown said in a press release. The fees used to be $25, though Ally said they never charged a customer more than one per day and the company gave a $10 grace amount before it used to charge..

Other banks say theyve eliminated overdraft fees, but thats because they dont allow overdrafts, Ally spokesperson Justin Nicolette told Yahoo Finance in an email. Other banks offer protection that allows for funds to transfer from a savings account to cover the transaction. Full elimination of fees is rare: notably, Discover Financial eliminated them in 2019.

Nationwide, more than 80% of overdraft fees are paid by consumers living paycheck to paycheck or with consistently low balances precisely the people who need help stabilizing their finances, Brown said. Eliminating these fees helps keep people from falling further behind and feeling penalized as they catch up.

Read more:

How To Get Overdraft Fees Waived

If youre charged an overdraft fee, here are some ways you may be able to get it waived.

Overdraft fees, especially from overdraft coverage, are some of the steepest fees that financial institutions charge. Knowing these fees might help you decide whether to opt out of the programs or find cheaper overdraft alternatives that your provider offers.

» Want to learn more? Read NerdWallets explainer on overdraft fees for;more on overdraft programs.

Bank Specifically Cites Impact That Overdraft Fees Have On Traditionally Poorer Black And Latino Households

The company logo is seen on the 16th floor of the Ally Detroit Center, headquarters of Ally Financial Inc., in downtown Detroit.

• Email icon

NEW YORK Ally Financial said Wednesday that it is ending overdraft fees entirely on all of its bank products, becoming the first large U.S. bank to end overdraft fees across its entire business.

Its a major move by Ally ALLY, +0.57% , one of the nations largest banks, and for the industry, which has been reliant on overdraft fees for decades to boost profits, often at the expense of poorer Americans who cant afford to pay such fees in the first place.

Critics of the practice often cite what they call the $38 cup of coffee, where a bank customer uses a debit card to buy a coffee, overdrafts, and ends up paying a $35 fee on top of the $3 drink.

In its announcement, Detroit-based Ally cited specifically the impact that overdraft fees have on Black and Latino households, which are historically poorer than their white counterparts and are hit with overdraft fees more often. Its also a common reason why Black and Latino households choose to be unbanked, that is being without a bank account, in order to avoid the fees that often come with these accounts.

Overdraft fees can be a major cause of anxiety, said Diane Morais, president of consumer and commercial banking at Ally Bank, in a statement. It became clear to us that the best way to relieve that anxiety was to eliminate those fees.

Read Also: Can Banks Help With Debt

Ally Bank Ends All Overdraft Fees First Large Bank To Do So

NEW YORK Ally Financial said Wednesday that it is ending overdraft fees entirely on all of its bank products, becoming the first large U.S. bank to end overdraft fees across its entire business.

Its a major move by Ally, one of the nations largest banks, and for the industry, which has been reliant on overdraft fees for decades to boost profits, often at the expense of poorer Americans who cant afford to pay such fees in the first place.

Critics of the practice often cite what they call the $38 cup of coffee, where a bank customer uses a debit card to buy a coffee, overdrafts, and ends up paying a $35 fee on top of the $3 drink.

In its announcement, Detroit-based Ally cited specifically the impact that overdraft fees have on Black and Latino households, which are historically poorer than their white counterparts and are hit with overdraft fees more often. Its also a common reason why Black and Latino households choose to be unbanked, that is being without a bank account, in order to avoid the fees that often come with these accounts.

Overdraft fees can be a major cause of anxiety, said Diane Morais, president of consumer and commercial banking at Ally Bank, in a statement. It became clear to us that the best way to relieve that anxiety was to eliminate those fees.

The announcement affects roughly 3.6 million checking, savings and money market accounts, the bank said.

However, Ally is the first big U.S. bank to get rid of overdraft fees altogether.

Most Read

Online Banks: Changing The Landscape Of Overdraft Fees

In recent years, some of the best online banks and neobanks have been introducing new online checking accounts that do not charge overdraft fees or that offer convenient alternatives to overdraft fees. Here are a handful of those institutions:

• Axos Bank: Does not charge overdraft fees or NSF fees on its Essential Checking or Rewards Checking accounts.
• Discover Bank: Does not charge overdraft fees.
• nbkc bank: Does not charge overdraft fees.
• Chime: With Chimes SpotMe service, you can overdraw your account by up to $20 on debit card purchases without being charged an overdraft fee. Chime offers a SpotMe allowance of up to $200, depending on your account history.
• Huntington Bank: Offers its 24-Hour Grace feature to give you extra time to make a deposit to avoid overdraft fees. Huntington also offers a feature called the $50 Safety Zoneif you accidentally overdraw your account by $50 or less, you wont be charged an overdraft fee. On June 1, 2021, Huntington also announced a new service called Standby Cash, which lets eligible customers qualify for an instant line of credit up to $1,000; this line of credit is connected to the customers checking account and can help thwart overdraft fees.

Read Also: How Long Before Bank Of America Charges Overdraft Fee

Ally Bank Interest Checking Account

Monthly Fee

0.10%

With $0 minimum balance

Ally offers an interest-bearing checking account with minimal fees and free access to over 43,000 ATMs nationwide. Ally will also reimburse you up to $10 per statement cycle for any fees youâre charged using an out-of-network ATM in the U.S.

Note that Ally doesn’t accept cash deposits. Your options include mobile check deposit, setting up direct deposit, setting up a wire transfer or sending a check by mail. Ally allows customers to deposit up to $50,000 per day and $250,000 per month via its mobile deposit feature.

Best Bank for CDs

We Also Provide A Free Overdraft Transfer Service

Well move money from your linked savings or money market account, in increments of $100, should you overdraft.; Keep in mind, if you link an account for overdraft transfer service, those transfers count toward the limit of 6 withdrawals per statement cycle, but were continuing to reimburse excessive transaction fees as well.

Read Also: How To Transfer Stimulus Card To Bank

The Recent History Of Overdrafts

In the digital age, consumers can bank without the concern of overdraft and non-sufficient fund fees, but only if they do so without using paper checks. Fintech apps such as Aspiration and Chime do not have overdraft fees, but they are also difficult to overdraw on due to the immediate nature of electronic transactions and updating account information.

Similarly, Discover Financial does not charge for overdrafts, but Discover Financial and fintech apps are not legally banks.

Banks must be officially chartered with the federal government, which Ally is. Banks provide checking and savings accounts services and are allowed to make a profit, which is where overdraft protections and fees come in.

Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to Codetic.

What Is An Overdraft Fee

When a transaction drops your checking account balance below zero, a financial institution will choose to reject or cover the transaction. You may be charged fees in either case. The charge for a rejected transaction or check is known as a nonsufficient funds fee, while the charge for an approved transaction is called an overdraft fee. Some providers charge multiple nonsufficient funds or overdraft fees per day if you make many transactions with a negative balance, meaning you could owe hundreds of dollars in penalties.

You can read our explainer on how to avoid overdraft fees. As a rule, its best to opt out of overdraft coverage for ATM or one-time debit card transactions if you think you will have issues with overdrafts. When you opt out, the negative debit or ATM transaction will be declined and you wont be charged a fee.

If not paying your overdraft fees has gotten you placed into Chexsystems, you may want to look into opening a second chance checking account. These accounts are designed to help consumers qualify for a new checking account even with marks on their banking record.

Some providers dont charge overdraft fees if an account is overdrawn by $5 or less at the end of the business day. So if you buy a $6 sandwich with $2 in your account, you would be exempt from a fee.

If you’re looking for financial institutions with no or low overdraft fees, here are a few of our recommendations.

Read Also: How To Activate Bank Of America Debit Card

Ally Bank Review: Checking Savings And Cds

Ally Bank is a popular online bank among people seeking strong rates and robust customer service. Because it doesnât have to put money into physical branches, Ally is able to offer higher rates and lower fees than many brick-and-mortar institutions.

Overall bank rating

The bottom line:

Ally Bank is online-only; the money it saves on overhead, it can pass to customers in the form of high interest rates and minimal fees. For example, the bank removed its overdraft fee in June 2021. It also has strong customer service and is ideal for people who don’t need branch access for their banking.

Best for: Those who want competitive rates, minimal fees, easy access to customer support, and donât need to deposit cash or access in-person services.

Pros

• No monthly maintenance fees or minimum balances on checking, savings or CDs.

• Access to over 43,000 free ATMs via checking or money market accounts.

• An above-average interest rate on savings.

Cons

• No way to deposit cash.

• No branches available.

The Ancient History Of Overdrafts

Prior to the pandemic, and for almost as long as banks have existed, banks have found a way to charge customers for trying to spend more than they had in their accounts.

Either they charged a fee for the overdraft , or they charged customers for overdraft protection, which provided financial coverage on overdrafts, although the customer still had to come up with the money they spent over their account balance. Overdraft protection fees average between $30 and $35 per month.

Read Also: How Can I Get Loan From Bank

One Email A Day Could Help You Save Thousands

Tips and tricks from the experts delivered straight to your inbox that could help you save thousands of dollars. Sign up now for free access to our Personal Finance Boot Camp.

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Should You Open An Account With Axos Bank

Axos Bank doesnt offer the highest interest rates available among online banks. However, the interest rates they pay are many times higher than what youll get at your local bank or credit union.

Some of their checking accounts also come with extra benefits. For example, the Cash Back checking account with cash back on signature purchases using your debit card. You can earn up to $2,000 cash back per month.

Another big advantage of Axos Bank is that its one of the few online banks that operate as a full-service bank. In addition to the usual deposit accounts, you can also use the bank for mortgage financing, personal loans and auto loans. And if youre a business owner, you can take advantage of business banking services.

Axos Bank is designed for customers who are looking for the full range of banking services from an online bank, and not necessarily the highest interest rates available.

If youd like more information, or if youd like to open an account, check out the Axos Bank website.

Read Also: How To Add Money To Paypal From Bank Account

What Are Ally Bank Checking Account Fees

Ally has just one checking account Interest Checking. This is an interest-bearing account with no minimum deposit or balance required. Theres no maintenance fee for this account, and you wont pay for copies of your online statements, incoming wire transfers or cashiers checks, either. But Interest Checking does have a few fees you should be aware of.

Online Bank Says It Will No Longer Charge The $25 Penalty; Ally Received Positive Feedback When It Waived The Fee Early In The Pandemic

Ally automatically waived overdraft fees between March and July 2020.

Overdraft fees are a thing of the past at Ally Financial Inc.

Customers who overdraw their accounts will no longer face a $25 penalty, the bank said Wednesday. The change applies to the roughly 3.6 million checking, savings and money-market accounts at Allys online bank. Typically, Ally charged for each day that a customer tried to buy something when their account was more than $10 in the red, except on debit-card transactions.

Recommended Reading: How Much Can You Overdraft With Bank Of America

Con: Transactions May Not Clear If Your Backup Source Is Low Or Empty

Another disadvantage: Your transactions still wont clear if you dont have enough money in the linked account to cover the shortfall. It might not be a big deal to have a transaction declined,;but in an emergency its nice to have a source of backup funds. However, if your backup funding source is tapped out as well, you still wont be able to complete the;transaction.

Whats more, if you know you cant rely on overdraft protection in an emergency, you have to carry extra cash or a credit card, just in case. Paying cash for emergencies is your least expensive option. Using a credit card could be more or less expensive than overdraft protection, depending on the agreement and conditions.

The simplest and least expensive way of having overdraft protection is to link your checking account to your savings account, thus covering your overdraft with your own funds.

Youre Our First Priorityevery Time

We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.

Recommended Reading: What Does Pending Mean In Banking

Overdraft Fees A Thing Of The Past At Ally Bank First Large Us Bank To Drop Them

Ally Financial said Wednesday that it is ending overdraft fees entirely on all of its bank products, becoming the first large U.S. bank to end overdraft fees across its entire business.

It’s a major move by Ally, one of the nation’s largest banks, and for the industry, which has been reliant on overdraft fees for decades to boost profits, often at the expense of poorer Americans who can’t afford to pay such fees in the first place.

Critics of the practice often cite what they call the $38 cup of coffee, where a bank customer uses a debit card to buy a coffee, overdrafts and ends up paying a $35 fee on top of the $3 drink.

In its announcement, Detroit-based Ally cited specifically the impact that overdraft fees have on Black and Latino households, which are historically poorer than their white counterparts and are hit with overdraft fees more often. It’s also a common reason why Black and Latino households choose to be unbanked, that is being without a bank account, in order to avoid the fees that often come with these accounts.

Overdraft fees can be a major cause of anxiety,” said Diane Morais, president of consumer and commercial banking at Ally Bank, in a statement. “It became clear to us that the best way to relieve that anxiety was to eliminate those fees.

The announcement affects roughly 3.6 million checking, savings and money market accounts, the bank said.

However, Ally is the first big U.S. bank to get rid of overdraft fees altogether.