How to Avoid Overdraft Fees [8 Ways]

Overdraft fees are the worst kind of surprise.

You go to buy groceries or fill up your tank, and boom … your account dips below zero. Next thing you know, your bank slaps on a $35 fee for the privilege of being broke. And if you keep swiping? That fee can multiply fast.

Overdraft fees are especially rough on people living paycheck to paycheck. In fact, low-income consumers are the most likely to get hit with them and the least able to afford them.

But you don’t need to just accept overdraft fees as a part of banking life. There are plenty of ways to dodge them, from setting smarter alerts to switching banks altogether. 

Here are eight practical strategies you can use to avoid overdraft fees.

I recommend—and personally do this myself—keeping enough in your checking account to cover half a month to a full month of expenses, including discretionary spending. If that’s not feasible, or even as an added layer of awareness, I highly suggest using a budgeting app. These tools can track your spending, send alerts, and help you stay on top of your finances. I recommend them to all of my clients. If you’d rather not use an app, you can set up alerts through your bank to notify you when your balance drops below a certain amount or when bills are set to auto-draft. Ultimately, the goal is to have a clear understanding of your budget and the timing of your expenses, and to ensure your account is always adequately funded.

1. Know your bank’s overdraft policy

Overdraft rules aren’t the same at every bank, so knowing how your bank handles overdrafts can help you avoid unnecessary fees.

You can look up your bank’s overdraft fee policy by going to its website and looking for “Overdraft Services,” “Account Disclosures,” or “Fee Schedule.” Knowing the fine print gives you a better shot at avoiding those $35 hits altogether.

For example, here are overdraft policies from three of the largest banks in the U.S.:

2. Set up low balance alerts

Still not sure how to avoid overdraft fees? Another option is to catch the problem before it happens.

Most banks and credit unions let you set up low balance alerts. These are notifications that ping you when your account dips below a certain amount. You can usually choose the threshold (like $100, $50, or even $5), and how you want to be alerted (text, email, or app notification).

Here’s why it works: A heads-up gives you time to transfer money, pause spending, or rethink that next tap of your debit card. 

You can set up low balance alerts like this: 

1. Log in to your bank’s app or website.
2. Go to “Alerts” or “Notifications” in your profile settings.
3. Choose the “Account balance” alert.
4. Set your preferred threshold and delivery method.

Some apps even let you set multiple thresholds, so you can get a gentle warning at $100 and a more urgent one at $10.

Tip

Make sure push notifications are enabled on your phone, or low balance alerts might end up buried in your inbox.

3. Link a backup funding source

If your checking account runs low, linking a backup account can help cover the difference and spare you the overdraft fee.

Most banks let you connect a:

• Savings account
• Credit card
• Line of credit

Then, if a transaction overdraws your checking account, the bank will automatically transfer funds from the backup account to cover the overdraw.

A few examples:

This method still isn’t foolproof. If your backup account doesn’t have enough funds, the transfer might fail, and you could still be hit with a fee. That said, this setup can be a solid safety net if you regularly keep it close.

Tip

Try to use a savings account as your backup if possible. Pulling from a credit card or line of credit can lead to interest charges or affect your credit score if you’re not careful.

4. Use a cash advance app like EarnIn

If you’ve ever overdrawn your account two days before payday, you’re not alone. That’s where cash advance apps like EarnIn can help.

EarnIn lets you access up to $100 a day (and up to $750 per pay period) of your paycheck before it hits your account—without interest, credit checks, or hidden fees. You just tip what you think is fair.

Here’s how it helps you avoid overdraft fees:

• Say your rent is due on Friday, but your paycheck doesn’t land until Monday.
• Instead of overdrafting to cover it, you use EarnIn to get a portion of your paycheck early.
• Now you’ve paid your bill and avoided an overdraft fee.

EarnIn also offers Balance Shield Alerts and automatic cash-outs when your balance drops below a certain amount. It’s basically an emergency backup before your account goes negative.

EarnIn and other cash advance apps can be especially helpful for people with unpredictable pay schedules, like gig workers or hourly employees. Of course, they’re not a permanent fix, but they can make a big difference as an overdraft-avoidance tool.

5. Track spending in real time

If you’ve ever looked at your bank balance and thought, Wait, where did my money go?—you’re not alone. Overspending often happens when we’re not paying attention.

Tracking your spending (even loosely) can help you spot patterns, avoid surprise charges, and learn how to avoid overdraft fees before they start.

You don’t need to be a spreadsheet nerd to make it work. Here are a few easy options:

• Budgeting apps: Tools like YNAB (You Need a Budget), Rocket Money, or even your bank’s built-in tools can sync with your accounts and give you a real-time snapshot of your spending.
• Cash envelopes or debit-only spending: These help limit overspending by making you physically (or mentally) see when your money is gone.
• Check-ins: Just glancing at your balance before you make a purchase can shift your decision-making. You might be inclined to spend less when you check your balance often.

6. Opt out of overdraft coverage

Another option is to just say no to overdrafts altogether.

Most banks let you opt out of standard overdraft coverage. That means if you don’t have enough money in your account, your debit card transaction will be declined, and you won’t be charged a fee. It might feel embarrassing in the moment, but it’s better than accidentally racking up $100 in fees over a few small purchases.

To opt out, look for “Overdraft Settings” in your bank’s app or website. You can usually toggle the option off in just a few clicks or call your bank directly to make the change.

This option won’t protect you from fees on checks or scheduled bill payments. But it’s great for day-to-day debit card purchases, where you’d rather get declined than pay a $35 fee for a $7 coffee.

7. Build a small buffer

Keeping a small buffer (like $25 or $50) in your checking account can help you avoid overdrafts, even if your balance gets close to zero. It’s not always easy to set aside extra cash, but even a little can go a long way when you’re cutting it close.

Here are a few ways to build and protect your buffer:

• Set a “fake zero.” Mentally subtract $50 from your actual balance. If your account says $80, treat it like you have $30.
• Round down your spending. If you buy lunch for $8.65, record it as $10 in your budget. Those extra cents can slowly add up to a cushion.
• Budget into next month (if you can). Apps like YNAB encourage you to use this month’s income to fund next month’s expenses. It’s a great way to separate your spending and build in a natural buffer—without needing to rely on willpower alone.

8. Switch to a bank with no overdraft fees

If your current bank charges steep overdraft fees (and isn’t budging), it might be time to break up.

Plenty of banks and credit unions now offer no-fee overdraft policies or built-in protections that make overdrafts way less painful. Some even decline transactions instead of approving them and charging you.

Here are some popular banks that don’t charge overdraft fees at all, ever:

• Ally Bank: No overdraft fees. Plus, you get access to free overdraft transfers from a linked Ally savings account and CoverDraft protection, which automatically covers overdrafts up to $100 (or up to $250 if eligible).
• Capital One 360 Checking: No overdraft fees. Offers three options for coverage: auto-decline, free savings transfers, or free overdraft on approved transactions.
• Discover Bank: No overdraft fees. You can either link a savings account for free transfers or have transactions declined to avoid going into the red.
• Chime: No overdraft fees with SpotMe, which covers up to $200 in overdrafts with no fees if you qualify.
• Alliant Credit Union: No overdraft fees. Offers free transfers from a linked savings account or temporary overdraft coverage for up to 30 days.

If the bank you’re switching to meets your needs and doesn’t charge overdraft or other fees, it could be a smart choice!

Switching banks might sound like a hassle, but if overdraft fees are eating into your budget month after month, it could save you hundreds over time.

Tip

Many of these banks also offer perks like early direct deposit, automatic savings tools, and better mobile apps. So you’re not just dodging fees. You’re upgrading your whole banking experience.