You should never pay overdraft fees again

August 12, 2021

By Pam Leibfried

You should never pay overdraft fees again

mother washing dishes with son

If you follow financial news, you may have seen some recent coverage of overdraft fees. They’ve been in the news quite a bit lately, with big bank CEOs facing Congressional committees investigating how much banks are profiting by charging their customers high overdraft fees.

An overview of bank overdraft fees

An overdraft occurs when you write a check or make an automated payment that is for an amount higher than your account balance. For example, if your checking account has a balance of $950 and you write a rent check for $1,100, you’d be overdrafted by $150.

When an overdraft happens, your bank may refuse to complete the transaction due to “non-sufficient funds” (NSF), they may transfer money from a linked savings account to cover the difference, or they may process the transaction despite your overdraft, covering the difference for you with the expectation that you’ll pay them back.

Traditionally, when someone overdrafts, they are charged a fee by their bank. Big banks typically charge around $35 when someone overdrafts their account. That’s a pretty steep price to pay for making a math error or forgetting to tell your spouse about a check you wrote on your joint account.

Overdraft fees impact millions of Americans. A recent study found that 32% of checking accountholders pay an overdraft fee to their bank at some point. Another study found that between overdraft fees, ATM usage fees and monthly account maintenance fees a lot of banks charge, the average checking consumer paid nearly $1,000 in fees over the last decade.

In fact, during that decade, banks actually earned more from the fees they charged their customers than banks paid out to those customers in interest! Overdraft banking fees cost consumers $12.4 billion in 2020. 

Alliant’s great news about overdrafts

If you’re a member of Alliant, you’ll be thrilled to hear that we’ve recently been in the news because we're eliminating our overdraft fees for all Alliant checking and savings accounts!

We’re keeping it simple. Our no-overdraft fee policy applies to all checking and savings accounts, not just those of current members or members who maintain high balances. We haven’t added complicated conditions you have to meet to avoid overdraft fees.

We’re simply eliminating them entirely. All of them. Effective August 2, 2021, overdraft fees are a thing of the past for Alliant members: 

  • Non-sufficient funds (NSF).  (aka, a “bounced” check). Please note that although Alliant no longer charges NSF fees, the vendor or financial institution you were attempting to pay might charge you a fee. For example, if I wrote an Alliant check paying my TJMaxx store card and that check was refused as an NSF, TJMaxx might charge me a fee for writing an NSF check to them. But I can rest assured that Alliant won’t charge me. 
  • Overdraft Protection.1 When you designate a back-up savings account so we can transfer funds to cover your overdrafts.
  • Standard Courtesy Pay.2 With this service, which is standard with all Alliant checking accounts, Alliant covers check, automated transfer and Bill Pay overdrafts for you, and you must deposit the overdraft amount into your account to repay us within 30 days.
  • Extended Courtesy Pay.2 This optional protection covers overdrafts made via debit card transaction.

We know that everyone makes mistakes sometimes, whether it’s a math error, an errant check deposit, or a miscommunication with an account’s joint owner. Emergencies happen, and we've got our members' backs.

Why Alliant eliminated overdraft fees

At Alliant, we’ve always challenged old-fashioned banking norms like depending on high fees, maintaining expensive physical branches and prioritizing stockholder profits at the expense of the customers’ best interests.

In fact, we don’t even have stockholders. As a credit union, our member accountholders are our owners, so why would we want to soak our owners by charging a lot of high fees?

How Alliant overdraft fee refunds will work

We haven’t made any policy or process changes to our overdraft service (Courtesy Pay). The only change is that there will no longer be a fee to use the service.

Eliminating our overdraft fees is just one of the ways that we put our members first to make banking better.

1. Overdraft Protection is optional. You must opt in to benefit from this free service. Alliant's Overdraft Protection Program honors your overdrafts on your checking account when you don’t have enough money in your Alliant Checking Account to cover a transaction, provided you have enough money in your Alliant Regular Savings or Supplemental Savings Account. To do so, we automatically transfer funds from your regular savings or supplemental savings account to your Alliant Checking Account to cover your overdrafts. Overdraft Protection does not cover ATM transactions.

2. Courtesy Pay is a discretionary "courtesy" service. There is no fee to enroll in Courtesy Pay. To be eligible for Courtesy Pay, members must be in good standing and have an Alliant Checking Account that has been open for at least six months. Other eligibility factors are risk-based and determined by Alliant using internal and confidential information, including your account history. To qualify to use Courtesy Pay, eligible members must have qualifying deposits totaling at least $600 into their Alliant Checking Account in the previous 30 days. Standard Courtesy Pay may pay checks and ACH electronic items that would not have not cleared otherwise due to insufficient funds, up to an approved limit. If you opt in for extended coverage, Courtesy Pay may also cover everyday debit card transactions on your Alliant Visa debit card that would not have cleared otherwise due to insufficient funds, up to an approved limit. The full amount of the overdraft balance will be due immediately but in no event more than 30 days from the date of the occurrence at which time Courtesy Pay privileges will be suspended and possibly terminated. See the Alliant Account Agreement and Disclosures and the Courtesy Pay Disclosure for details and the Fee Schedule for a list of fees. Courtesy Pay does not cover ATM transactions.

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