How CoverDraft takes the stress out of accidental overspending

Jan. 3, 20253 min read

When it comes to managing your money, you don’t need to do it alone. As an Ally Bank customer, our features, such as buckets, CoverDraft^SM and early direct deposit, work together to help you manage your money and pursue your financial goals. Let’s take a closer look at how CoverDraft offers additional protection against overdrafts.

What is CoverDraft, and how does it work?

If you have an Ally Bank Spending Account, you’re enrolled automatically into CoverDraft. That means if you accidentally spend more than you have in your spending account, you’re protected up to a certain amount. CoverDraft acts as a safety net that gives you protection up to $250 in the event you overdraft your checking account.

In most cases, you’ll qualify for CoverDraft 30 days after you deposit a total of $100 into your account. If you accidentally overspend in cases where CoverDraft applies, we have your back for qualifying transactions up to:

$250 for Spending Accounts with qualifying direct deposits
$100 for Spending Accounts without direct deposit

The next deposit you make will automatically apply to the negative balance, and you have 14 days to deposit enough to bring your account out of the negative. And the best news? There are no hidden fees, no interest charges and no requirement to maintain a minimum balance.

Keep in mind, CoverDraft is not a line of credit or a guarantee. If your purchase isn't covered for any reason (like if the transaction exceeds your limit), it will be declined — but we'll never charge you an overdraft fee.

Here’s a breakdown of which transactions are typically covered by CoverDraft (and which aren't):

What's typically covered by CoverDraft. Debit card purchases, including cash back from merchants are covered. Automatic payments, like monthly subscription fees are covered. Transfers you initiate at other institutions are covered. Checks or transfers you initiate before overdrafting your account are covered. What's not covered by CoverDraft. Sending money via Zelle or wire transfer is not covered. ATM withdrawals are not covered. Online transfers between Ally Bank accounts are not covered.

How am I protected even when there are no overdraft fees?

Ally Bank eliminated overdraft fees, but even without fees, an overdrawn account can still affect you at the worst possible time. Ally Bank offers a one-two punch of overdraft protection: CoverDraft and Overdraft Transfer Service.

CoverDraft acts as a safety net that works alongside our Overdraft Transfer Service.

To use Ally’s Overdraft Transfer Service, link your Ally Bank Spending Account to your Ally Bank Savings Account or Money Market Account). When turned on, we’ll check to see if there’s enough to cover the full transaction in your linked account. If not, we’ll use CoverDraft instead. By having access to both options, you’ll have peace of mind knowing your point-of-sale, transfer and bill pay transactions can be covered.

Is there a downside to overdraft protection?

Overdraft protection may help in a pinch, but expenses can still add up. If you choose to enroll in any form of overdraft protection, stay vigilant and remember to replenish your savings regularly.

We’ve got you covered

At Ally, we don’t believe in unnecessary fees and charges. In 2021, we were one of the first large U.S. banks to eliminate overdraft fees. We’re proud to offer CoverDraft as an additional service to ensure you have an extra line of protection against unexpected overdraft fees.

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