Banks are in a race to end overdraft fees — these 7 checking accounts won't charge you

In early 2022, Capital One became the first large bank to eliminate all overdraft fees and non-sufficient fund fees, in a move that may protect itself from any forthcoming scrutiny from the Consumer Financial Protection Bureau (CFPB).

On the heels of that announcement, JPMorgan Chase said that it will give account holders more ways to avoid paying overdraft service fees: Customers now have a full day after overdrawing their account to replenish their balance, and customers can access their direct deposit payroll funds two days early.

Though these are the two banks in the news as of late, both join a trend of some smaller banks dropping their overdraft charges to attract more consumers. Previously, online-only Ally Bank put an end to overdraft fees on all accounts in an attempt to help keep people from falling behind financially as the pandemic continued.

An overdraft fee is a common banking fee that gets charged when you spend more than the amount available in your account. This results in a negative balance, and you may be hit with a steep overdraft fee up to $35 (sometimes per transaction).

Being short on funds can happen easily if you aren't keeping an eye on your bank balance, and those living paycheck to paycheck are most vulnerable. In fact, 43% of vulnerable households with checking accounts report having overdrafted in the past year, with 9.6 overdrafts on average, according to the 2021 FinHealth Spend Report. At a $35 fee per overdraft, that's nearly $350 per year consumers are paying because they didn't have enough money available to cover a purchase, payment or withdrawal.

Below, CNBC Select outlines seven checking accounts with zero overdraft fees so that you can rest assured you won't be charged next time you make this common mistake.

1. Capital One 360 Checking® Account

Capital One 360 Checking charges no overdraft fees or non-sufficient fund fees. It currently has no monthly maintenance fees, minimum deposit or balance requirements. Account holders earn 0.10% APY and have access to its free ATM network of 70,000+ Capital One®, MoneyPass and Allpoint® ATMs.

2. Ally Bank Spending Account

The Ally Bank Spending Account (Ally's checking product) has zero overdraft fees, monthly maintenance fees, minimum deposit or balance requirements. Account holders earn 0.10% APY on balances less than $15,000 and 0.25% APY on balances over $15,000. Its free ATM network includes 43,000+ Allpoint® ATMs.

3. Discover® Cashback Debit Account

The Discover® Cashback Debit Checking does not charge for its overdraft protection that you can opt in to — money is taken from your Discover savings account to cover an overdraft. There are no monthly maintenance fees, and account holders don't need to make a minimum deposit or maintain a minimum balance. With this checking account, you can also get rewards for your spending: Earn 1% cash back on up to $3,000 in debit card purchases each month. Discover's free ATM network includes 60,000+ Allpoint® and MoneyPass® ATMs.

4. Axos Bank Rewards Checking

With Axos Bank Rewards Checking, an online bank, customers won't pay monthly fees or overdraft fees. There are no minimum balance requirements, but you must deposit $50 to open an account. There are also tiered APY rates where account holders can earn up to 3.30% APY, if they meet specific requirements: Receive monthly direct deposits totaling $1,500 or more, maintain an average daily balance of $2,500 per month in an Axos Invest Managed Portfolios Account, maintain an average daily balance of $2,500 per month in an Axos Invest Self Directed Trading Account, use your Rewards Checking account to make your full monthly Axos Bank consumer loan payment and use the debit card for at least 10 monthly transactions.

5. Betterment Checking

Betterment Checking customers can take advantage of this online-only account that has no overdraft fees or account minimum requirements. Betterment will also reimburse all your out-of-network ATM fees worldwide, including foreign transaction fees. Account holders can earn automatic cash back rewards when they spend on popular brands, such as Dunkin', adidas, Walmart, Sam's Club and Staples. Plus, get cell phone insurance at no cost when you pay your cell phone bill with Betterment's debit card.

6. Wealthfront Cash Account

Wealthfront Cash Account offers customers no account fees or overdraft fees. You can earn 4.55% APY on all account balances, as well as get access to 19,000 free ATMs. Wealthfront also makes it easy to invest faster by allowing account holders to transfer (for free) their extra cash into a connected Wealthfront investment account.

7. Alliant Credit Union High-Rate Checking

The Alliant Credit Union High-Rate Checking has no monthly service fee, minimum balance requirement or overdraft fees. The checking account also offers a higher-than-average 0.25% APY on all balances, and account holders can access over 80,000 free ATMs nationwide.

Overdraft fees may not seem like an issue at first when you're only charged around $30, but overdraw from your account more than once and this can certainly add up.

If overdrafting is something you have experienced in the past, consider signing up for one of the above checking accounts to avoid paying any extra fees.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every banking article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Information about the Capital One 360 Checking, Ally Bank Spending Account, Discover Cashback Debit Account, and Alliant Credit Union High-Rate Checking Account has been collected independently by Select and has not been reviewed, nor provided by the issuers prior to publication.

Ally Bank, Capital One Bank, and Discover® Bank, are Members FDIC. Alliant Credit Union is a Member NCUA.