Your bank will cover the transaction, then charge you a fee

When you spend more money than you have in your checking account, your bank can choose to cover the difference. This is called an overdraft. The transaction goes through, but you now owe the bank money. Your bank will then charge you an overdraft fee — typically $25 to $35 per transaction, though some banks charge more. You may also face a second fee if your account stays negative for several days.

Not every bank handles overdrafts the same way. Some banks automatically cover overdrafts and charge a fee. Others decline the transaction and charge a fee for the attempt. A few banks offer overdraft protection, which links your checking account to a savings account or credit line and transfers money automatically when you go negative. Understanding your bank's specific overdraft policy matters because the fees add up quickly if you overdraw multiple times.

Key Takeaways

  • Overdraft fees typically range from $25 to $35 per transaction, and you can be charged multiple fees in a single day if several transactions post while your account is negative.
  • Your bank decides whether to cover overdrafts or decline them — federal law does not require banks to cover overdrafts, though most do for debit card and ATM transactions.
  • You can opt out of overdraft coverage, which means transactions will be declined instead of covered, preventing fees but also preventing purchases.
  • Overdraft protection through a linked savings account or credit line can prevent fees by automatically transferring money, but you pay interest on credit line transfers.
  • If your account stays negative for more than a few days, your bank may charge a second fee and eventually close your account or send it to collections.

How overdraft fees stack up in a single day

Banks process transactions in an order that is not always the order you made them. Many banks process larger transactions first, which can cause multiple overdraft fees in one day even if you only went negative once. For example, if you have $50 in your account and make a $20 coffee purchase, a $40 grocery purchase, and a $60 gas purchase on the same day, your bank might process them as $60, $40, $20 — causing you to overdraft on the first and second transactions. That is two overdraft fees ($50 to $70) on a total overage of $70.

Some banks charge a fee for each transaction that posts while your account is negative. Others charge one fee per day, regardless of how many transactions overdraft. A few charge a fee for the first overdraft and then a smaller daily fee if the account stays negative. Check your bank's fee schedule or account agreement to know which model applies to you. The difference between one fee and five fees in a day can be $100 or more.

What happens if you stay overdrawn for days or weeks

If you do not deposit money to bring your account positive within a few days, your bank will charge a second type of fee — sometimes called a sustained overdraft fee or extended overdraft fee. This typically appears after 5 to 7 days of a negative balance and ranges from $25 to $35. If you stay negative for weeks, you may be charged this fee multiple times.

After 30 to 60 days of a negative balance, your bank may close your account and report you to ChexSystems, a banking history database. This makes it harder to open a new checking account at other banks for up to five years. If the negative balance is large enough, your bank may also send your account to a collection agency, which will contact you to recover the debt. A collections account on your record can affect your ability to rent an apartment or get hired for certain jobs.

Opting out of overdraft coverage

Federal law allows you to opt out of overdraft coverage for debit card and ATM transactions. If you opt out, your transaction will be declined instead of covered, and you will not be charged an overdraft fee. You will simply not be able to complete the purchase. This prevents surprise fees but also means you cannot use your debit card if your balance is too low.

To opt out, contact your bank directly — by phone, in person, or through your online banking portal. Some banks make this easy; others bury the option in account settings. Ask your bank how to opt out and whether the change applies to all transaction types or only debit card and ATM transactions. Checks and automatic bill payments may still overdraft even if you opt out of debit card coverage, depending on your bank's policy.

Overdraft protection through linked accounts or credit lines

Many banks offer overdraft protection, which automatically transfers money from a linked savings account or credit line when your checking account goes negative. If you have $200 in savings and your checking account drops to -$50, the bank transfers $50 from savings to cover it. You avoid the overdraft fee, but you may pay a small transfer fee (usually $0 to $10) or interest if the transfer comes from a credit line.

Overdraft protection works only if you have money in the linked account or available credit on the line. If your savings account is also empty, the transfer cannot happen and you will still overdraft. Credit line transfers also charge interest — typically 18% to 25% annually — so a $100 transfer costs you money even though you avoided the overdraft fee. Compare the cost of overdraft protection against the cost of overdraft fees for your situation.

How to recover from an overdraft

The first step is to deposit money to bring your account positive. Your bank will apply the deposit to your negative balance first, then to any fees owed. If you deposited $100 and your balance is -$50 with a $35 fee, the deposit covers both and leaves you with $15. Once your account is positive, the overdraft is resolved, though the fee remains on your record.

If you were charged an overdraft fee you believe was unfair — for example, if a bank error caused the overdraft or if you were charged multiple fees for a single transaction — contact your bank and ask for a fee reversal. Banks often reverse one or two fees per year if you have a good account history and ask politely. Put your request in writing (email or letter) and keep a copy. If your bank refuses, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov.

Preventing overdrafts before they happen

Set up account alerts through your bank's app or website. Most banks let you receive a text or email when your balance drops below a certain amount — typically $100 or $500. This gives you time to transfer money or adjust your spending before you overdraft. Some banks also offer a grace period: if you bring your account positive within 24 hours, they waive the overdraft fee.

Track your spending in real time by checking your balance before making large purchases. Many people overdraft because they forget about pending transactions — a check that has not cleared yet, an automatic bill payment scheduled for tomorrow, or a hold on a hotel reservation. Your available balance (what you can spend right now) is often lower than your current balance (what you have after cleared transactions). Use your bank's app to see both numbers.

Frequently Asked Questions

Can my bank refuse to cover an overdraft?

Yes. Federal law does not require banks to cover overdrafts. Most banks cover debit card and ATM transactions automatically, but they can decline checks and automatic bill payments. Some banks decline all overdrafts. Your account agreement or fee schedule will state your bank's policy. You can also call your bank to ask what types of transactions they cover.

Will an overdraft hurt my credit score?

An overdraft by itself does not appear on your credit report and does not hurt your score. However, if your account goes to collections because you did not pay the negative balance, that collection account will appear on your credit report and lower your score significantly. Overdrafts also trigger ChexSystems reports, which affect your ability to open new bank accounts but do not directly impact credit scores.

How long does an overdraft stay on my record?

An overdraft fee is a transaction on your account statement and stays visible in your account history as long as you keep the account open. If your account goes to collections, the collection account stays on your credit report for seven years. ChexSystems records stay for five years. Once the time period passes, the record is removed.

What if I overdraft at an ATM or with a debit card?

ATM and debit card overdrafts are treated the same as other overdrafts — your bank covers the transaction and charges a fee, or declines it depending on your bank's policy. You have the right to opt out of overdraft coverage for these transactions specifically. If you opt out, the ATM will not dispense cash and the debit card will be declined, but you will not be charged a fee.

Can I dispute an overdraft fee?

Yes. Contact your bank and explain why you believe the fee was unfair. Banks often reverse fees if you have a good history and the overdraft was caused by a bank error or unusual circumstance. If your bank refuses, file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. The CFPB investigates complaints and can pressure banks to reverse fees or refund money.