“Overdraft fees are deeply unpopular with consumers, and consumers now have more options,” says Leigh Phillips, CEO of fintech nonprofit SaverLife and chair of the Consumer Advisory Board of the US Financial Protection Bureau. Consumer. “They used to only have mainstream options like banks and credit unions or fringe services like payday loans. Now neobanks and challenger banks are creating services that are well suited to a variety of consumers.”

With the rise of these new smaller banks, in addition to the first online and mobile banking services, the banking industry has had to find more ways to compete for new customers. Overdrafts can be stressful and costly, and if a bank can help customers avoid these potentially significant fees, that bank could be more attractive to consumers.

“What we’ve found is that when we make these kinds of changes, our customers notice and potential customers notice,” says a Capital One spokesperson. “We’ve found that these policies, while costly in the short term They pay off in the long run.”

Some financial institutions, such as Chime and SoFi, have gone so far as to offer consumers a certain amount of money, similar to a line of credit, that they can use if they overdraw their accounts. These features are provided free with qualifying account activity. For example, Chime’s SpotMe feature can give customers up to $200 to cover the cost of a transaction instead of overdrafts, and SoFi offers customers up to $50.