Chase overdraft basics: what happens when you spend more than you have
When you make a purchase or withdrawal that exceeds your account balance, Chase can cover the difference through overdraft protection — but only if you have it turned on. Without it, the transaction is declined. With it, Chase pays the merchant or ATM operator, and you owe Chase the overdrawn amount plus a fee.
Chase offers two separate overdraft systems: overdraft protection (which links to a savings account, money market account, or credit line) and overdraft coverage (which is Chase's discretionary decision to pay overdrafts on debit card purchases and ATM withdrawals). These work differently, cost different amounts, and have different rules about when they kick in.
The key difference: overdraft protection is something you set up in advance and control. Overdraft coverage is not may provide — Chase decides whether to pay each overdraft, and you may not know until after the transaction posts.
Key Takeaways
- Overdraft protection links your checking account to a savings account or credit line and transfers money automatically when you overdraw; it costs nothing if you never overdraw, but the transfer itself may have a fee depending on your account type.
- Overdraft coverage is Chase's discretionary service that pays debit card and ATM overdrafts without a transfer; Chase charges $35 per overdraft item (as of 2024, though this varies by account and may change), and you are not may provide coverage on every transaction.
- Checks and ACH payments (bill payments, direct deposits) are not covered by overdraft coverage; they may be returned unpaid, and the merchant or biller may charge you a returned-payment fee.
- You can turn off overdraft coverage in your Chase mobile app or online banking, which means debit card and ATM transactions will be declined instead of overdrawing your account.
- If you overdraw and do not repay within a set period, Chase may close your account and report you to ChexSystems, making it harder to open accounts at other banks.
Overdraft protection: linking accounts to prevent overdrafts
Overdraft protection is a transfer system you set up yourself. You link your checking account to another account you own at Chase — typically a savings account, money market account, or line of credit. When your checking balance would go negative, Chase automatically transfers money from the linked account to cover the overdraft.
The transfer itself is usually free, but some Chase account types charge a small fee per transfer (typically $1 to $3). You control the minimum transfer amount and can turn the protection on or off anytime through your online banking or mobile app. Because you are moving your own money, there is no overdraft fee — you only pay if Chase charges a transfer fee.
Overdraft protection covers all transactions: debit card purchases, ATM withdrawals, checks, and ACH payments. If the linked account does not have enough money to cover the overdraft, the transaction is declined and you pay no fee.
Overdraft coverage: Chase's discretionary overdraft service
Overdraft coverage is different. It is Chase's decision to pay overdrafts on debit card purchases and ATM withdrawals when your account balance is negative. You do not set it up — it is available by default on most Chase checking accounts — but you can turn it off if you want transactions declined instead.
When Chase covers an overdraft, you pay an overdraft fee of $35 per item (as of 2024). This fee applies to each debit card transaction or ATM withdrawal that overdraws your account, even if multiple transactions happen on the same day. Chase may also charge a sustained overdraft fee if your account stays negative for more than a few days; this fee varies by account type but is typically $35 and charged once every five business days.
Overdraft coverage does not apply to checks or ACH transactions (bill payments, direct deposits to other accounts). If a check or ACH payment would overdraw your account, Chase returns it unpaid. The merchant or biller then charges you a returned-payment fee, which is usually $25 to $40 — separate from Chase's fee.
When Chase will and will not cover overdrafts
Chase does not may provide overdraft coverage on every transaction. The bank reserves the right to decline any overdraft, and the decision can depend on your account history, the size of the overdraft, and other factors Chase does not publicly disclose. Transactions are more likely to be covered if your account is in good standing and the overdraft is small, but this is not a rule.
Overdraft coverage typically applies only to debit card purchases at merchants and ATM withdrawals. Some transactions — such as recurring bill payments, wire transfers, and transfers to other banks — may not be covered even if overdraft coverage is turned on. Check your account agreement or call Chase at the number on the back of your card to confirm coverage for a specific transaction type.
If you have overdraft protection linked to another account, Chase will use that transfer first. Overdraft coverage kicks in only if the linked account does not have enough money or if you do not have overdraft protection set up.
How to turn overdraft coverage on or off
You can manage overdraft coverage through Chase's mobile app or online banking. Log in, go to your checking account settings, and look for "Overdraft Coverage" or "Overdraft Protection" options. You can turn coverage on or off with a few clicks — no phone call needed.
If you turn off overdraft coverage, debit card and ATM transactions will be declined if your balance is insufficient. This prevents overdraft fees but may be inconvenient if you need cash or make an unexpected purchase. Turning it off does not affect overdraft protection (the transfer system), which continues to work if you have it set up.
Changes to overdraft coverage settings usually take effect immediately, but it is wise to wait a few hours before making transactions to ensure the change has processed.
Overdraft fees and how they add up
Each overdraft item costs $35 (as of 2024, though this may vary by account type or change over time). If you make five debit card purchases while overdrawn, you pay $35 × 5 = $175 in overdraft fees, even if the total overdraft amount is only $50.
A sustained overdraft fee (charged when your account stays negative for several days) is typically another $35, applied once every five business days. If your account is overdrawn for two weeks, you could pay $70 in sustained fees alone, on top of the per-item fees.
These fees are separate from any fees charged by merchants or billers. If a check bounces, the merchant charges a returned-payment fee. If an ACH payment fails, the biller may charge a late fee or returned-payment fee. Chase's overdraft fees are in addition to these.
What happens if you do not repay an overdraft
If your account stays overdrawn for an extended period (typically 30 to 60 days, depending on your account agreement), Chase may close your account. When an account is closed due to overdraft, Chase reports it to ChexSystems, a banking history database. This report can make it difficult or impossible to open a checking account at other banks for several years.
Before closing an account, Chase usually sends notices and may attempt to contact you. If you receive a notice, contact Chase immediately to discuss a repayment plan. Paying the overdraft and any fees stops the closure process.
If your account is closed, you remain responsible for the overdrawn balance. Chase may pursue collection or file a claim against you in small claims court. Paying the balance as soon as possible limits additional collection fees and legal costs.
Frequently Asked Questions
Can I get overdraft fees waived if I call Chase?
Chase may waive one or two overdraft fees if you have a good account history and call to request it, but there is no may provide. The decision depends on the representative and your account. If you are charged a fee you believe is unfair, calling customer service is worth trying, but do not expect a waiver as a standard practice.
Does overdraft protection cost money if I never overdraw?
No. Overdraft protection is free unless Chase charges a per-transfer fee (typically $1 to $3 on certain account types). If you never overdraw, you pay nothing. Check your account agreement to see if your account type charges transfer fees.
What is the difference between overdraft coverage and overdraft protection?
Overdraft protection is a transfer system you set up that moves money from another account you own. Overdraft coverage is Chase's discretionary service that pays overdrafts on debit card and ATM transactions. Protection is free (except possible transfer fees), covers all transaction types, and is may provide. Coverage costs $35 per item, covers only debit and ATM, and is not may provide.
If I turn off overdraft coverage, will checks still bounce?
Yes. Turning off overdraft coverage only affects debit card and ATM transactions. Checks and ACH payments are always returned unpaid if your balance is insufficient, regardless of overdraft coverage settings. Overdraft protection (the transfer system) can prevent checks from bouncing if you have it set up.
How long does it take for an overdraft to post to my account?
Debit card and ATM overdrafts typically post within one business day. Checks and ACH payments may take longer — up to three business days — because they process on a different schedule. Overdraft fees are usually charged on the same day the overdraft posts, but sustained overdraft fees are charged every five business days after that.