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Published: Dec 03, 2021 7 min read
Capitol One Bank Building

Capital One, the sixth largest bank in the U.S. and Money's pick for the overall "Best National Bank" in 2021, announced this week it will eliminate overdraft fees in 2022.

This means that if a customer makes a purchase without enough money in the account to cover the expense, Capital One will allow the transaction to go through without charging an overdraft fee.

Also called non sufficient-fund fees, overdraft fees kick in when you make a withdrawal or debit card payment that goes over the available balance in your account. The bank then covers the expense as part of its overdraft protection program, and it generally charges you a fee in the process for what amounts to a short-lived loan.

The average overdraft fee often rings in at about $35. So, say you’re covered by overdraft protection and you unwittingly pay for a $5 coffee with a $0 balance. You’ll get your coffee — and it'll wind up costing a real total of $40.

Overdraft fees bring in big bucks for banks. According to the Consumer Financial Protection Bureau (CFPB), the banking industry reeled in $15.5 billion in overdraft fees in 2019 — with JPMorgan Chase, Wells Fargo and Bank of America accounting for 44% of that revenue.