A $34 grocery run that overdraws a checking account by even a few dollars still triggers a fee at most large banks, sometimes before the cardholder even sees the low-balance alert. Four of the twenty largest banks in the country have stopped collecting that fee under any circumstance, according to a review of overdraft practices published by the National Consumer Law Center. Capital One, Citibank, Ally Bank and American Express have each restructured their checking products so a shortfall gets declined, covered for free, or absorbed without a penalty attached, while overdraft revenue at the rest of the industry keeps climbing. For a household living close to the edge of its balance, the gap between a bank that charges $35 for the mistake and one that charges nothing amounts to the price of a grocery trip, repeated every time the balance runs short.
Four Accounts Built to Decline Before They Charge
The shared design choice across all four banks is the same: none of them treats a shortfall as a fee-generating event anymore. Capital One’s 360 Checking either declines a transaction that would overdraw the account or covers it through a free automatic transfer from a linked savings account, with no charge attached either way. Citibank’s checking accounts decline transactions that would create a negative balance rather than paying them and charging a fee for the service, a policy the bank extended to overdraft-protection transfers, non-sufficient-funds charges and returned items at the same time.
Ally Bank takes a similar approach on the front end but adds a safety net: transactions that would overdraw the account are declined, and customers enrolled in its CoverDraft service can still draw up to $250 in coverage that gets repaid automatically out of the next deposit, without a fee either way. American Express goes further than any of the other three. Its checking product was never built with an overdraft feature at all, so there is no fee to eliminate in the first place.
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Capital One and Citibank Gave Up a Combined Fee Stream Worth Hundreds of Millions
Capital One’s decision was the costlier one of the two to make. The bank had charged a $35 overdraft fee for customers enrolled in its next-day grace-period program before eliminating both overdraft and non-sufficient-funds fees in early 2022, a change that ended an income stream Bankrate estimated at roughly $150 million a year. Citibank moved next, dropping fees tied to overdrafts, overdraft-protection transfers, non-sufficient funds and returned items in June 2022, a single policy change that made it the largest U.S. bank to eliminate overdraft fees entirely. Both accounts still show up fee-free in the National Consumer Law Center’s current review of the twenty largest consumer banks, alongside Ally and American Express. Even so, total industry overdraft and non-sufficient-funds revenue rose to $12.1 billion in 2024 from $11.8 billion the year before, based on Financial Health Network data cited in the same industry review, a reminder that the four fee-free banks remain outliers rather than the new standard.
American Express Never Offered Overdraft Coverage in the First Place
American Express did not cut an existing fee so much as decline to build the product that generates one. The bank’s Rewards Checking Account Schedule, revised in November 2025, lists both the overdraft fee and the non-sufficient-funds fee as “No Amex Fee,” under a section stating that the bank does not offer overdraft services for the account at all. A transaction that would push the balance negative has to be repaid directly, and Amex charges no fee or interest on that shortfall itself, though a merchant or another bank can still assess its own charge if a payment bounces back unpaid.
The $5 Federal Cap That Never Took Effect
The four no-fee banks are the exception inside a regulatory environment that stopped pushing the rest of the industry toward the same outcome. The Consumer Financial Protection Bureau finalized a rule in late 2024 that would have capped most large banks’ overdraft fees at $5, or required them to treat overdraft coverage as a credit product with full cost disclosure, effective October 1, 2025. Congress voted to repeal that rule under the Congressional Review Act, and new agency leadership paused CFPB rulemaking and enforcement work in early 2025, so the cap never applied to a single transaction. Consumer advocates have estimated the rollback costs account holders more than $15 billion a year in fees the rule would have prevented.
What the Other Sixteen Still Charge
The gap between the no-fee holdouts and the rest of the top twenty is still wide enough to matter when a household compares checking accounts. Bank of America charges $10 per overdraft, capped at two fees a day, after cutting its fee down from $35 in 2022. Wells Fargo still charges $35 per overdraft with a 24-hour grace period to fix the balance, and U.S. Bank charges $36 once an account stays negative past its daily cutoff. Huntington Bank and KeyBank sit between the two extremes, charging $15 and $20 per occurrence respectively after each cut its fee by more than half in 2022, evidence that the pressure toward lower fees reaches well beyond the four banks that charge nothing at all. Even with sixteen of the twenty largest banks still collecting an overdraft fee in some form, the National Consumer Law Center’s review found that none of the twenty currently charges a separate non-sufficient-funds fee, a narrower charge tied to bounced checks and failed automatic payments that the industry abandoned faster than the overdraft fee itself.
When a Bank Account Goes Negative Somewhere Else
The four banks above are the exception inside a system where the other sixteen large banks, plus thousands of smaller ones, still charge for an overdraft, freeze a balance during a dispute, or turn a shortfall over to a collections process. None of the fee schedules in this piece cover what happens next: which deposits a bank is legally required to protect from a garnishment order, what a collector has to prove before demanding payment on a disputed item, or how to respond when an account gets frozen entirely.
The Bank Account & Debt Protection Kit lays out the 2-month bank protection rule that shields recent federal benefit deposits from garnishment, along with the debt-validation steps a collector is required to follow before collecting on a disputed charge.
See the frozen-account response and the protected-funds and dispute log in The Bank Account & Debt Protection Kit.
AI-assisted research and drafting; reviewed by an editor.
