Yes, your checking account can go negative, and banks handle it in different ways

Your account balance can drop below zero. When it does, you owe the bank money. The bank may cover the transaction that pushed you over (called overdraft coverage), or it may decline the transaction and charge you a fee anyway. Some banks do both — they cover the transaction and then charge you for covering it. Which happens depends on your bank's overdraft policy, whether you have overdraft protection turned on, and what type of transaction you're making.

The key difference is between overdraft fees (charged when the bank covers a transaction you don't have money for) and non-sufficient funds fees or NSF fees (charged when the bank declines the transaction). You might pay one, the other, or both, depending on your bank and the situation.

Key Takeaways

  • Banks can cover overdrafts and charge you a fee, decline the transaction and charge you a fee, or do neither — the policy varies by bank and account type.
  • Overdraft protection, if you have it, typically links your checking account to a savings account or credit line so the bank pulls money from there instead of charging a fee.
  • Fees for going negative usually range from $25 to $35 per transaction, and multiple transactions in one day can result in multiple fees.
  • Your account stays negative until you deposit money to bring the balance back to zero or above.
  • Repeatedly overdrawing can result in your account being closed by the bank, and the negative balance being sent to a collection agency.

How overdraft fees work at most banks

When you make a purchase, withdrawal, or payment and your account doesn't have enough money, the bank decides whether to cover it. If the bank covers the transaction, your account goes negative and you're charged an overdraft fee. This fee is usually $25 to $35, though some banks charge more. The fee is separate from the transaction itself — you still owe the money you spent, plus the fee.

If you make multiple transactions that overdraw your account on the same day, you may be charged a fee for each one. Some banks cap the total fees per day (often at two or three fees), but not all do. A day of several small purchases could cost you $50 to $105 in fees alone.

The bank doesn't have to cover the overdraft. If it declines the transaction instead, you're charged a non-sufficient funds fee (usually $25 to $35) and the transaction doesn't go through. You still owe nothing for the transaction itself, but you do owe the fee, and your account is still negative by that fee amount.

Overdraft protection: linking accounts or a credit line

Overdraft protection is a service you can turn on that prevents your account from going negative in the first place. Instead of charging you a fee, the bank automatically transfers money from another account you link to it — usually a savings account at the same bank, or sometimes a credit line or money market account.

If you have overdraft protection linked to a savings account, the bank pulls money from savings when you would otherwise overdraw checking. You don't pay an overdraft fee; instead, you pay whatever interest rate applies to the savings account (usually very little). If you link it to a credit line, the bank borrows on your behalf and you pay interest on that borrowed amount.

Overdraft protection is optional. You have to turn it on. If you don't have it, the bank's standard overdraft policy applies — either covering the transaction and charging a fee, or declining it and charging a fee.

What happens to your account if you stay negative

Your account remains negative until you deposit money. The negative balance is what you owe the bank. If you deposit $50 into an account that's $75 negative, your new balance is $-25. You're still negative and still owe money.

Banks typically don't charge interest on negative balances the way credit card companies do, but they do charge fees. Some banks charge a daily fee if your account stays negative for more than a few days — often $5 to $10 per day. These fees stack on top of the original overdraft fee, so a negative balance that sits for a week can cost you significantly more than the initial transaction.

If you don't bring your account positive within a set period (usually 30 to 60 days, depending on the bank), the bank may close your account. When that happens, any remaining negative balance is sent to a collection agency. The collection agency will attempt to recover the money from you, and the debt may appear on your credit report.

How to get out of a negative balance

Deposit money into the account. The deposit goes toward paying off the negative balance first, then any remaining deposit becomes your available balance. If your account is $40 negative and you deposit $100, your new balance is $60.

If you can't deposit enough to cover the negative balance and any fees, contact your bank. Some banks will waive one or two overdraft fees per year if you ask, especially if you've been a customer for a while and don't have a history of overdrafting. There's no may provide, but asking costs nothing. Be prepared to explain why the overdraft happened and what you're doing to prevent it in the future.

If your account has been closed and sent to collections, you'll need to contact the collection agency, not the bank. They may negotiate a settlement for less than the full amount owed, or you can pay the full amount. Once you've settled, ask for written confirmation and keep it. The debt may still appear on your credit report, but you'll have proof it's been resolved.

Preventing overdrafts: settings and habits

Turn on overdraft protection if your bank offers it and you have a linked account or credit line to pull from. This is the most direct way to prevent fees.

If you don't want overdraft protection, ask your bank to decline transactions instead of covering them. Some banks call this "opt-out" overdraft coverage. With this setting, if you don't have money, the transaction is declined and you're not charged an overdraft fee — you just can't complete the purchase. You avoid fees, but you also can't accidentally spend money you don't have.

Check your account balance before making large purchases or payments. Set up balance alerts through your bank's app or website so you're notified when your balance drops below a certain amount — usually $100 or $200. These alerts give you time to deposit money before you overdraw.

Avoid linking too many automatic payments to your checking account. The more automatic transactions you have, the harder it is to track your balance and the easier it is to overdraw without realizing it.

Frequently Asked Questions

Can a bank close my account if I go negative?

Yes. If your account stays negative for 30 to 60 days (the timeframe varies by bank), the bank can close it. The remaining negative balance is then sent to a collection agency. You'll receive notice before the account is closed, usually giving you time to bring it positive or settle the debt.

Will going negative hurt my credit score?

An overdraft itself doesn't appear on your credit report and won't hurt your score. However, if the negative balance is sent to a collection agency and you don't pay it, the collection account will appear on your report and will damage your score. Paying the debt or settling it can help, but the collection account may remain on your report for up to seven years.

What's the difference between an overdraft fee and an NSF fee?

An overdraft fee is charged when the bank covers a transaction you don't have money for. An NSF (non-sufficient funds) fee is charged when the bank declines the transaction because you don't have money. Both are usually $25 to $35, but they apply in different situations.

Can I overdraw my account with a debit card at a store?

Yes, if your bank has overdraft coverage turned on. The transaction will go through, your account will go negative, and you'll be charged an overdraft fee. If you've opted out of overdraft coverage, the transaction will be declined at the register.

Do I have to pay overdraft fees if the bank made a mistake?

If the bank made an error — for example, posting a deposit late or charging a fee twice — contact them and ask them to reverse the fee. Banks often will if you can show the mistake. If the overdraft was your mistake, the bank is not required to waive the fee, but you can ask.