Ally Bank illustration

Ally Has Announced the End of Overdraft Fees

If you ask anyone who’s had a negative experience with banks what in particular was so bad about them, I suspect that “overdraft fees” would be an overwhelmingly popular response. After all, the very idea of overdraft fees sounds like a stand-up comedy premise: “You don’t have any money so we’re going to take more of your non-existent money from you.”

What’s more, consumers have often complained about institutions being super shady with the way they post transactions, starting with the largest purchase so that more individual transactions are in the red and, thus, incur more fees. Personally, I’ve endured more than my fair share of overdrafts, with most of them hitting in my early 20s. Heck, I distinctly remember paying a total of $36.50 for a $1.50 candy bar (although a very kind and sympathetic teller at Wells Fargo actually took care of that one and a few others, slipping me a note that read “I reversed 5 O.D.s”). Given this experience, I’m always happy to see banks moving away from this practice — including Ally, which made the big announcement this week.

In an email to customers, Ally revealed that it was eliminating overdraft fees for its checking, savings, and money market accounts. Incidentally, the bank had already been crediting back customers who were hit with overdrafts in the past several months. This proactive practice being a courtesy during the pandemic. For now, this “post and reverse” process will continue but Ally says that “in a few weeks, they’ll be removed entirely.”

If you’re like me, this news may have you wondering exactly what Ally means when it says they’re ending overdraft fees. For example, while plenty of FinTech banking options waive such fees, more often than not this just means that transactions that would overdraw your account are declined. On the one hand, that’s a good thing… but on the other, it could mean that customers are forced to look into payday loans or similarly expensive products to make ends meet. Luckily, according to a report in the AP, Ally will continue to approve some overdrafts, although this will of course be at their discretion. They also note that smaller transactions are more likely to go through. Interestingly, AP points out that customers will have six days to bring their accounts back to positive territory, so I’m not exactly sure what happens if they don’t.

Even though Ally is still an online bank, which have traditionally had more attractive terms than their brick and mortar counterparts, this still feels like a pretty big move. Granted, it’s one that Discover Bank made nearly two years ago, but hey better late than never. Personally, I’m curious to see if perhaps more traditional banks begin to see the light and start easing their fee-fanatic ways. Hell may have to freeze over first but I’m actually fairly bullish on at least one or two of the big players trying compassion on for size. In any case, kudos to Ally for doing the right thing — and here’s hoping that more follow.

Author
Founder ~ Moneyat30
Kyle is a freelance writer - including being the head writer for Fioney.com. He also serves as editorial director for the Disney fan site LaughingPlace.com and the founder of Money@30.com. In 2015, Kyle and his wife Bekah moved from Los Angeles to Springfield MO in pursuit of greater financial freedom. Together, the pair enjoy travel, coffee, and spending time with their dog Rigby. Additionally, as of 2023, they become first-time homeowners.
Other Articles by Kyle Burbank
two American Express Platinum Cards
An Amex Platinum Card Revamp is Coming — And I'm Worried
Earlier this week, Chase confirmed pretty much every rumor that had been swirling for the past couple of months by announcing details on a major refresh for its uber popular Sapphire Reserve card. When this refresh launches next week (or in October for current cardholders), it will bring new credits, a reimagined rewards-earning system, and...
interior of an airplane
When is the Best Time to Book a Flight?
In just the past few years, the travel industry has changed tremendously. Yet, there’s one aspect that’s remained the same: people are looking to save money. Yes, while we all wish money were no object so that we could plan the trip of our dreams without restrictions, the fact is that booking a flight can...
a hand and 5 credit cards
Not *That* Great: 3 Rewards Credit Card Tricks to Watch Out For
I write a lot about credit cards. That not only includes reviewing the ones I have but also discussing new cards and my thoughts on whether they're worth it. In doing this, I've now come across a few recurring themes that I think highlight how some credit card marketing can oversell what you're actually getting....

Leave a Reply

Featured Articles
An Amex Platinum Card Revamp is Coming — And I'm Worried
Earlier this week, Chase confirmed pretty much every rumor that had been swirling for the past couple of months by announcing details on a major refresh for its uber popular Sapphire Reserve card. When this refresh launches next week (or in October for current cardholders), it will bring new credits, a reimagined rewards-earning system, and...
When is the Best Time to Book a Flight?
In just the past few years, the travel industry has changed tremendously. Yet, there’s one aspect that’s remained the same: people are looking to save money. Yes, while we all wish money were no object so that we could plan the trip of our dreams without restrictions, the fact is that booking a flight can...
Not *That* Great: 3 Rewards Credit Card Tricks to Watch Out For
I write a lot about credit cards. That not only includes reviewing the ones I have but also discussing new cards and my thoughts on whether they're worth it. In doing this, I've now come across a few recurring themes that I think highlight how some credit card marketing can oversell what you're actually getting....
Discover is Debuting a Super Practical Quarterly Bonus Category
As I've shared before, the Discover It card was the first card I applied for when I got over my fear of credit and began to embrace the rewards hobby. Because of this, it still holds a special place in my heart and wallet, even if it's not my most-used card anymore. In particular, though,...