Your bank will charge you an overdraft fee, usually $25 to $35 per transaction that pushes you below zero, and may freeze your account or close it if the negative balance persists.

When you spend more money than you have in your account, the bank covers the difference temporarily—but charges you for doing so. The fee hits your account immediately or within one business day. If you don't deposit money to cover both the overdraft amount and the fee, your balance stays negative, and the bank may charge additional fees each day the account remains below zero.

Some banks also charge a "sustained overdraft fee" or "extended overdraft fee" after your account has been negative for a set number of days—usually five to seven. This stacks on top of the transaction fee. A single $5 purchase that overdrafts your account can cost you $60 to $100 by the time fees accumulate.

Key Takeaways

  • Overdraft fees typically range from $25 to $35 per transaction that causes a negative balance, charged by the bank within one business day.
  • Banks may charge additional daily fees if your account stays negative for more than a few days, compounding the cost quickly.
  • Your bank can freeze your account, refuse new transactions, or close it entirely if you remain overdrawn for 30 to 60 days without depositing funds.
  • Negative balances are reported to ChexSystems, a banking history database, which can make it harder to open a new account at another bank.
  • Overdraft protection and opting out of overdraft coverage are two different choices that change how your bank handles transactions when funds are low.

How overdraft fees are charged and when they stop

The bank charges an overdraft fee each time a transaction (debit card purchase, check, ACH transfer, or ATM withdrawal) brings your balance below zero. If you have $50 in your account and make three $30 purchases, you'll be charged three separate overdraft fees—one for each transaction—even though you're only $40 short overall. Some banks cap the number of overdraft fees per day (often at two or three), but others do not.

The fee appears in your account within 24 hours. If you deposit money before the end of that business day, the fee still applies—it does not reverse automatically. You have to contact the bank and request a refund, which they may grant once or twice per year depending on their policy, but they are not required to.

If your account stays negative, the bank charges a second fee after five to seven days. This "extended overdraft fee" or "negative balance fee" is separate from the transaction fee and typically costs $5 to $15 per day. A $50 overdraft can cost $75 to $150 in fees alone within two weeks if you don't deposit money.

When your bank freezes or closes your account

Banks are not required to keep an account open if it remains negative. Most banks will freeze your account—blocking all new transactions—if you stay overdrawn for 30 to 60 days without depositing funds. A frozen account means you cannot make purchases, transfer money, or withdraw cash, even if someone deposits money into it. The bank may hold that deposit to cover the negative balance and fees first.

After 60 to 90 days of a negative balance, the bank may close your account entirely and send the debt to a collections agency. You will receive a notice in the mail before this happens, but the timeline varies by bank. Once an account is closed due to overdraft, that information stays on your banking record and makes it difficult to open a new account elsewhere.

If your account is closed and you still owe money, the bank can pursue collection efforts. They may attempt to collect the debt themselves, sell it to a third-party collector, or report it to a credit bureau. This does not affect your credit score directly (overdrafts are not reported to credit bureaus), but a collections account on your record can make it harder to rent an apartment or pass a background check.

How ChexSystems reports affect your next bank account

ChexSystems is a banking history database that most banks check before opening a new account. If you overdraft an account and leave it unresolved, the bank reports it to ChexSystems. This report stays on file for five years and flags you as a risk to other banks.

When you apply for a new checking account, the bank pulls your ChexSystems report. A history of overdrafts, especially unresolved ones, can result in a denial. Some banks will open an account for you but with restrictions—no debit card, no overdraft protection, or a requirement to maintain a minimum balance. Others will simply decline.

You can request your ChexSystems report for free once per year at www.chexsystems.com. If there are errors or if you've resolved the overdraft, you can dispute the information or ask the original bank to update your status. Resolving the overdraft (paying what you owe) does not automatically remove the report, but it may help when you explain the situation to a new bank.

Overdraft protection versus opting out of overdraft coverage

Overdraft protection links your checking account to a savings account, credit card, or line of credit. If a transaction would overdraft your checking account, the bank automatically transfers money from the linked account to cover it. You pay a transfer fee (usually $10 to $15) instead of an overdraft fee, which is cheaper. However, you must have money available in the linked account, and the transfer may not process instantly if it's a credit card or line of credit.

Opting out of overdraft coverage means the bank will decline transactions that would overdraft your account. Your debit card will be rejected at the register, your check will bounce, or your ATM withdrawal will fail. This prevents overdraft fees entirely, but it can be embarrassing and may cause other problems—a bounced check can trigger a fee from the merchant, for example. You can opt out by contacting your bank or through your online banking portal.

Federal law requires banks to ask your permission before charging overdraft fees on debit card and ATM transactions. If you have not explicitly opted in to overdraft coverage, the bank should decline these transactions rather than overdraft your account. However, banks are allowed to overdraft your account for checks and ACH transfers without your permission, so opting out does not protect you completely.

Steps to recover from a negative balance

Deposit money as soon as possible to cover both the negative balance and the fees. The bank applies deposits to fees first, then to the overdraft amount. If you owe $50 and have $75 in fees, you need to deposit at least $125 to bring your account to zero. Contact your bank to confirm the exact amount owed, including any pending fees that have not yet posted.

If you cannot deposit the full amount immediately, deposit what you can and ask the bank to pause additional daily fees while you work toward resolving the balance. Some banks will do this as a courtesy, especially if you have been a customer for a long time. This is not may provide, but it costs nothing to ask.

Request a refund of one or two overdraft fees if this is your first time or if you have a good history with the bank. Banks often grant one refund per year as a courtesy. Be polite and explain the situation briefly—do not demand or argue. If the bank refuses, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) if you believe the fees were charged unfairly or if the bank violated overdraft rules.

Once your account is positive again, set up a low-balance alert through your bank's app or website. Most banks allow you to receive a text or email when your balance drops below a threshold you set—usually $100 or $200. This gives you time to deposit money before a transaction overdrafts your account.

What to do if your bank closes your account

If your bank closes your account due to overdraft, you will receive written notice. The notice will state the reason, the amount owed, and your options. You must pay the full amount owed (the negative balance plus all fees) to resolve the debt. The bank may apply any deposits you make to this balance automatically.

Once you have paid the balance in full, ask the bank in writing to remove the ChexSystems report or update it to show the account is resolved. The bank is not required to do this, but some will if you request it. Keep a copy of your payment confirmation and any correspondence with the bank.

If the bank has already sent your debt to a collections agency, you will receive a letter from the collector. You can negotiate a settlement (paying less than the full amount owed) or set up a payment plan. Do not ignore collection letters—responding and working toward resolution is your best option for avoiding further damage to your banking record.

Frequently Asked Questions

Can I be arrested for having a negative bank account?

No. Overdrafting your bank account is a civil matter between you and the bank, not a criminal one. The bank can pursue collection efforts, but you cannot be arrested or jailed for owing money to a bank. However, if you write a check knowing you do not have funds and the check bounces, some states allow merchants to pursue criminal charges for fraud—though this is rare and usually only happens if the check was for a large amount.

Will a negative bank account hurt my credit score?

Overdrafts are not reported to credit bureaus, so they do not directly affect your credit score. However, if the bank sends your debt to a collections agency and the collector reports it, that can damage your credit. Additionally, a ChexSystems report can prevent you from opening a new account, which indirectly affects your financial options.

What if I dispute a transaction that caused the overdraft?

If you dispute a debit card transaction or ACH transfer, the bank will investigate. If the transaction is found to be fraudulent, the bank will reverse it and refund any overdraft fees caused by that transaction. However, if the transaction is legitimate, the overdraft fee stands. File a dispute through your bank's app or by calling customer service.

Can I get overdraft fees refunded if I call the bank?

Banks are not required to refund overdraft fees, but many will refund one or two per year if you ask politely and have a good history with them. Your chances are better if this is your first overdraft or if you have been a customer for several years. There is no harm in asking, and some banks will reverse the fee without hesitation.

How long does a negative balance stay on my banking record?

ChexSystems reports remain on file for five years. After five years, the report is removed automatically. However, if the bank closed your account and sent the debt to collections, the collections account may appear on your banking record separately and could affect your ability to open a new account even after the ChexSystems report expires.