overdrawn fees

Save money with bank accounts that don’t charge overdrawn fees

Overdrawn fees explained: Find out which accounts won’t charge you for spending past your available bank account balance.

When you spend more money than you have in your bank account, you’ve overdrawn your account. Reforms to the banking sector changed the way banks charge customers for overdrawing transaction accounts.

Although overdraw fees still exist, now more than ever, there’s a choice of bank accounts to compare which don’t charge a fee for overdrawing your account. You can compare no overdraw fee bank accounts on this page.

What are overdrawn fees and how do I avoid them?

Overdrawn fees are a charge applied by your bank when you spend more money than you have in your transaction account. Not all banks charge overdrawn fees, so not all banks will let you overdraw your account. If your bank does let you overdraw your account, it will only be by a small amount ($10 for example), this amount varies depending on financial institution.

While choosing a bank account which doesn’t charge overdrawn fees gives you confidence that you’ll never pay extra for spending money you don’t have, it presents a problem if you have direct debit agreements with service providers and monthly charges are more than the money in your account. The direct debit is dishonoured and you may incur additional fees.

Overdrawn fees charged by the Big 4 Banks

From Australia’s Big 4 banking institutions: ANZ, NAB, Commonwealth Bank and Westpac; only NAB do not charge a fee if you overdraw your transaction account. These two banks may decline a transaction which takes you past your available balance.

Commonwealth Bank and Westpac may allow you to spend more money than you have in your account; however, you’ll incur an overdrawn fee for doing so.

BankOverdrawn fee

Avoid overdrawn fees with a NAB classic banking account

Rates last updated June 25th, 2017
Monthly Account Fee Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Details
NAB Classic Banking
$0 monthly account fees.
Tap and pay with your NAB Visa Debit card, NAB Pay for Android or NAB PayTag for iPhone.
Visa $0 $0 $0 account keeping fees with no deposit conditions. Unlimited free withdrawals at NAB and rediATMs. Go to site More

What are the types of fees charged to bank accounts?

While not all institutions charge these fees, common fees among different everyday bank accounts include:

Account keeping fee

This is a fee for owning the account which is usually charged every month. Some banks offer account keeping fee waivers if you meet conditions such as deposit $2,000 or more every month. Most banks can also waive this fee if you’re a student or pensioner.

Overdrawn fee

A charge if you make a transaction that overdraws your bank account.

Australian ATM withdrawal fees

Most bank accounts attract a fee if you’re using an ATM not related to your bank. For example, St.George cardholders can make free ATM withdrawals at Westpac ATMs but incur a charge using Commonwealth Bank ATMs and vice versa.

International ATM withdrawal fee

A flat fee for using an ATM in another country. Some banks waive this fee, for example, Citibank don’t charge an international ATM withdrawal fee and Westpac waive this fee when you use any ATM which is part of the Global ATM Alliance.

Currency conversion fee

The majority of accounts available will charge a fee of about 3% if you make an EFTPOS purchase outside Australia. This includes overseas online purchases. The Citibank Plus Transaction Account and the Macquarie Bank Platinum Transaction account don't charge for currency conversion.

Statement fee

You may incur a charge if you request an additional paper print out of your account statement.

Cheque dishonour fee

A fee charged by your banking institution when you write a cheque and it bounces due to insufficient funds in your account.

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Are bank accounts with no overdrawn fees actually a good idea?

The good

  • No fees. You’ll never pay extra for spending money you don’t have.
  • Add an overdraft. Most financial institutions will let you attach an overdraft facility to your bank account. If you overdraw your account, your line of credit will be used. Interest applies to the portion of the overdraft you use. You’re under no obligation to use the overdraft line of credit.

And the bad

  • Rejected transactions. If you have direct debit agreements with service providers and one month your need to pay more money than you in your account (like $20 or $30), the transaction will be rejected. You may then incur a fee from the third party or your bank for having missed a payment.
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What are some things to avoid about bank accounts with no overdrawn fees?

If your bank account doesn’t charge overdrawn fees, they will not let you spend more than you have in your account. As mentioned above, make sure you always have enough money in your account to honour your direct debit agreements. If you don’t the direct debit payment may be rejected and you may incur fees from the debtor and your bank.

Help, I have some more questions! 

Each account has a limit on how much money you can withdraw every day. For most accounts it’s somewhere between $800 and $1,000.

You can apply for a personal overdraft from within your online banking facility or in branch. Eligibility criteria apply.

Complete and return a direct debit request form, which is available on your bank’s website.

If a direct debit is rejected because you do not have enough money in your account, a direct debit dishonour notice is issued by your bank. You must deposit funds in your account so the transaction can be processed or make another arrangement with the service provider.

Want to avoid fees all together? Compare fee-free bank accounts here.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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2 Responses to Save money with bank accounts that don’t charge overdrawn fees

  1. Default Gravatar
    Aimee | May 28, 2016

    I am on a centrelink benefit. Is it legal to be continuously charged overdrawn fees?

    • Staff
      Shirley | May 30, 2016

      Hi Aimee,

      Thanks for your question.

      Unfortunately financial institutions have a right to charge overdrawn fees in line with their terms and conditions. If you’ve consistently overdrawn on your account, then this fee could be charged.

      To avoid this fee, you may want to consider a bank account that doesn’t charge overdrawn fees.

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