Good News: You May Be Saving $150 Without Realizing It

Overdraft fees are the devil. Seriously. They drain your accounts. Worse, you're typically charged these banking fees when you need money most.

I've lost hundreds of dollars to back-to-back overdraft fees. Mostly pre-pandemic, back when I was a fresh-faced collegiate with nary a credit card to my name. But the times are a-changin'.

I bring good news: You may be saving money without realizing it.

You're paying less in overdraft fees

Banks charge you overdraft fees for attempting to withdraw more money than you have in your checking account. Costs go as high as $37 per attempted withdrawal. These can quickly stack up. The average American pays $250 yearly in overdraft fees.

But there's good news. According to a recent CFPB report, banks are charging smaller and fewer overdraft fees. In recent years, Bank of America slashed its overdraft fee to $10, Chase instituted grace periods, and U.S. Bank doesn't charge you for minor infractions.

Those savings add up. The CFPB estimates the average overdrafted American saves $150 annually in reduced fees compared to pre-pandemic levels. If your bank frequently charges you overdraft fees, you're probably saving even more.

That's excellent for your wallet, but what gives? Brick-and-mortar banks may be changing policies due to stiff competition for your business. Put simply, you have options -- and many of these options are blessedly free of overdraft fees.

READ MORE: Checking Account Fees and How to Avoid Them

Many online banks don't charge overdraft fees

Many online banks are fee-free, for the most part. They don't charge monthly fees or overdraft fees. That's a huge perk. After all, you put cash in checking accounts to spend it and keep it safe, not to shell out backbreaking fees. After college, I switched banks to take advantage of zero-fee options.

Chime® is my current fee-free banking app. I've opened a combined Chime Checking and Savings account. It's a basic account that I can manage from an easy-to-use app. The 2.00% annual percentage yield (APY) on savings deposits isn't the best, but it's better than what most traditional banks offer.

SoFi® (short for "Social Finance") has caught my attention. It offers the SoFi Checking and Savings account combo (member FDIC) similar to mine but with better interest rates on savings deposits -- up to 3.80%. SoFi charges zero fees, and it offers overdraft protection in some cases.⁷

Banking customers look to online banks as solid alternatives to brick-and-mortar options. And by doing so, we're forcing big banks to charge less fees. (Nicely done, by the way.)

READ MORE: How to Open a Checking Account Online

Reduce overdraft fees

Won't or can't switch banks? I get it. Switching banks can be challenging, especially if you're a long-time customer. Sometimes, it's not worth the effort. Even if you stick with banks that charge you overdraft fees, you can take steps to pay less and save more by making these moves.

• Challenge unfair fees: You can contact your bank if you think you've been unfairly charged. I've done this, saving me about $100 yearly on back-to-back charges. You can do this by calling your bank's customer service line and requesting a refund.
• Sign up for balance alerts: Some banks let you sign up for low balance alerts. Your bank notifies you when you're low on funds (and therefore vulnerable to overdraft fees). You can often sign up online. If you have questions, contact a bank representative for assistance.
• Keep an eye on your balance: By monitoring your account and avoiding overdrafting, you'll have a better chance at enjoying a fee-free experience.

And if you want to switch to one of the best checking accounts out there, well. You can. Go for it if you have the time, energy, and desire to bank better. The choice is yours.

Capital One offers a fee-free checking account

Capital One is the only brick-and-mortar bank to grace Motley Fool Money's list of best checking accounts. One reason: It doesn't charge overdraft fees on its Capital One 360 Checking account. It combines traditional banking -- think real, physical branches -- with modern perks.